The National Center for Education Statistics (NCES) projects that nearly 2 million college students will graduate at the bachelor’s degree level in 2017. If you’re one of them, it’s just a matter of weeks until you’ll be stepping out into the real world with responsibilities you never knew existed. The thrill of finally being out on your own will no doubt collide with the stress of knowing that, yes, you’re actually out on your own.
There are a number of things you can do to start preparing for your financial future once those classroom doors close behind you. Here are a few tips
- Create a budget – and stick to it. Even though you’re out of school, you’re going to have to do your “homework” to figure out what your income and expenses will be week-to-week, or month-to-month. And then you’ll need to ensure that your incoming cash flow will cover your expenses, including any student loan payments you’ll have to start making after graduation. If you find that your expenditures outweigh your income, you’ll need to make some tweaks to your budget. Fortunately there are software programs out there (both free and paid versions) that can help you manage your budget. The key, of course, is to discipline yourself and stick with the budget you’ve created. Otherwise, you could find yourself sliding deep into debt.
- Steer clear of debt. Credit cards can be your friend or enemy, depending on how you use them. Financial experts recommend that you only use them lightly if you’re fresh out of college. And try to pay off your balance every month to avoid costly interest charges. It can be tempting to “charge now and pay later”, but the debt can quickly pile up if you don’t manage your credit carefully.
- Put aside money for your short-term goals. Are you planning to move out of your parents’ house into your own apartment? Or maybe you’ll need a down payment for a new car to get you to all of those job interviews. Whatever your situation, you’re likely to have a few sizable expenditures on the horizon after you graduate. Knowing you have money set aside for both planned and unplanned expenses can give you peace of mind, and help you reach the goals you’ve set.
- Start saving for your retirement now. If your employer has a 401k program, enroll in it right away, especially if they will match your contribution to some degree. Even if you can only afford to put away $25 from each paycheck, you’ll be heading in the right direction and laying the foundation for good savings habits. Just don’t forget that as your income starts to rise, you should start saving a higher amount from each paycheck. If your employer doesn’t offer a company-sponsored plan, you can still save for retirement on your own. One option available to those who don’t have a plan through their employer is an Individual Retirement Account (also known as an IRA).
- Don’t forget the insurance. Whether it’s medical insurance, life insurance, or both, you should look into getting coverage. An accident that results in injuries could lead to major medical bills if you’re not covered insurance-wise, and you could end up paying on those bills for a long time. And life insurance is especially important if you’re planning to start a family in the near future and you want to provide a financial “security blanket” for those you love.
Taking the time to plan now will help you to feel more financially prepared as you set out on your own. Congratulations on your graduation, and best of luck!