When you graduate from college it can be an overwhelming time. There are many decisions to be made and those decisions can greatly impact your financial future. Below is some advice to help get you started down the right track.
1. Understand your student loans. Put together a spreadsheet of all your student loans and list out the corresponding interest rates. Educate yourself. Learn what you have available for payment options for each loan and select a payment plan that you can stick with. Keep in mind that it is financially wise to pay down your loans with higher interest rates first. Here is a great video by Federal Student Aid to help give you an overview of student loan basics: Repayment- What to Expect
2. Get a credit card as soon as possible. If you do not already have a credit card, get one as soon as possible. My recommendation is to use the credit card for the majority of your purchases and then pay it off by the end of every month (if you can). This helps build credit and improve your credit score. Did you know that 15% of your FICO credit score is made up of credit age alone? So the sooner you open lines of credit, such as having a credit card, the better. And having a good credit score is the golden ticket to buying a car, purchasing a home and even potentially being hired by a future employer.
3. Make a budget. Understand your fixed expenses vs. discretionary expenses. Fixed expenses are costs that cannot be avoided- such as rent and car payment. Discretionary expenses are costs that can be avoided- such as eating out and other entertainment. Creating a budget will help you figure out how much of a salary you will need in your first job. You want to avoid accepting a position, if possible, that does not cover your fixed expenses, because that is setting yourself up for debt. And the last thing you want to do in your new life after college is to rack up large amounts of debt (on top of the student loan tab I’m sure you already have). Use my budget template: Budget Worksheet
4. Open both a checking & savings bank account. When you have followed the steps above and are on track to have a little something leftover at the end of every month, open a savings account. The savings account should be thought of as something you do not touch. Setup a systematic monthly transfer from your checking account to your savings account. When your funds are out of sight, they are out of mind too. This helps you to continually try to save on a monthly basis. Just remember, money always looks better in the bank!
Giana Armano
Financial Advisor
Securities offered through LPL Financial. Member FINRA/SIPC. Investment Advice offered through Flagship Private Wealth a registered investment advisor & separate entity from LPL Financial.