Graduating college is a huge achievement, deserving of the celebrations that typically go along with it. With a diploma in hand, you can see the world open wide for you, and the possibilities for your future can seem endless. On the other hand, adulthood comes with rent, car payments, job searches and student loan repayments—and the financial demands can also seem endless.
Here are six tips for recent grads to help you stay financially responsible while trying to get your life in the real world started.
1. Develop a budget or spending plan.
Think about your monthly income and what expenses you have. First, consider your basic needs, such as food, shelter and clothing. How much money do you need for groceries, rent, gas and utilities? Devise a budget and stick with it.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2. Make sure you have a student loan repayment plan.
According to studentaid.ed.gov, recent grads have several options for repaying their student loans. Ignoring the situation is not one of them. Even if you can't make a payment, you have to deal with it responsibly and devise a strategy to repay it when you can. There are options such as lowering the monthly payment or applying for a deferment or forbearance, which stops the student loan bill for a determined amount of time. Visit www.StudentLoans.Gov for more details.
3. Start a rainy day fund.
Put extra money aside for emergencies. Life is uncertain: the car could have issues, or you could have a dental or medical problem. You want to have enough cash on hand to cover any of these kinds of situations when they inevitably occur. Furthermore, consider the domino effect: if the car needs to be fixed, how are you getting to work? Always think, "What if?" And plan ahead.
4. Know your credit history.
Being financially responsible decreases the odds of falling behind on bills, which can damage your credit score. A poor credit score may result in higher interest rates when applying for loans. If you have bad credit, you might not qualify for a car loan or mortgage. It could even cause issues in attaining a good job. Also, many landlords will check your credit history before renting you an apartment. You can check your credit report for free at www.annualcreditreport.com. The site is a helpful resource for learning about credit scores and obtaining tips to improve a spotty credit history.
5. Protect yourself with insurance.
According to the National Association of Insurance Commissioners (NAIC), the average renter's insurance policy costs between $15 and $30 per month. Renter's insurance provides a safety net in case you get robbed or your apartment burns down. You might think it'd be cheaper to replace stolen or damaged items, but being held liable for an accident in the apartment would be more costly. And some landlords may require you to have it.
Health insurance is definitely required. Your employer likely offers this benefit. However, even if you don't have that option, health care can still be accessible and affordable. At www.healthcare.gov, you can find several options for recent college grads.
6. Start thinking about retirement.
What, you can't possibly be thinking about retirement!? Think again. Sure, you're young and just starting out. However, it is crucial that you start retirement planning as soon as possible. Think of it as wealth accumulation. It's a trifecta: Time value of money, tax deferred growth and compound interest all working for you to help you accumulate wealth for your future. Plus, if your employer offers a match or contribution to your 401(k), you need to take advantage of that. Don't leave money on the table.
Using these simple tips will make life easier and more affordable—and you'll be well on your journey to wealth creation.
Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth. She is a spokesperson for the AARP Financial Freedom Campaign, a CFP Board Ambassador and proudly serves on the FPA National Board of Directors.
-
Get Netflix, Hulu and Apple TV Plus for Free by Joining T-MobileT-Mobile customers save up to $35/month on streaming services thanks to this Netflix, Hulu and Apple TV Plus bundle. Here’s how to get it.
-
Missed Tax Day? You Could Still Be Eligible for These Valuable Tax RefundsTax Refunds As many as one million taxpayers could be missing out on a significant tax refund.
-
Going to College? How to Navigate the Financial PlanningCollege decisions this year seem even more complex than usual, including determining whether a school is a 'financial fit.' Here's how to find your way.
-
Financial Steps After a Loved One's Alzheimer's DiagnosisIt's important to move fast on legal safeguards, estate planning and more while your loved one still has the capacity to make decisions.
-
Two Don'ts and Four Dos During Trump's Trade WarThe financial rules have changed now that tariffs have disrupted the markets and created economic uncertainty. What can you do? (And what shouldn't you do?)
-
I'm Single, With No Kids: Why Do I Need an Estate Plan?Unless you have a plan in place, guess who might be making all the decisions about your prized possessions, or even your health care: a court.
-
Most Investors Aren't as Diversified as They Think: Are You?You could be facing a surprisingly dangerous amount of concentration risk without realizing it. Fixing that problem starts with knowing exactly what you own.
-
Will My Children Inherit Too Much?If you worry about how your children will handle an inheritance, you're not alone. Luckily, you have options — from lifetime gifting to trusts — that can help.
-
Charitable Giving Lessons From Netflix's 'Apple Cider Vinegar'Charity fraud is rife, and a Netflix series provides a timely warning about donating money to a good cause without looking into its background.
-
Four Takeaways From Filing Your Taxes to Boost Your Financial FutureNow that another tax season is in the rearview mirror for most of us, what lessons can you take from what you learned about your finances to plan for the future?
