Just Graduated? These 7 Financial Tips Are For You
You’ve finally graduated from college and are ready to strike out on your own. Then it hits you: There are a lot of new financial responsibilities ahead. If you’re like most new grads, the thought of financial independence seems appealing on the surface, but if you’re not sure where to start, it can feel overwhelming fast. Luckily, there are a few things you can do to start out on the right foot.
1. Be an Aggressive Job Hunter
Finding a job can be challenging these days. Competition for entry-level positions is high, and many positions are going to candidates with years of experience under their belts.
The best thing you can do is be persistent. Don’t give up if you get a few rejections. Keep applying for jobs that you’re interested in. It’s okay to take a job that is outside your field of interest, at least temporarily, if it means you’ll have the money to support yourself.
Start checking job boards daily. If you’re looking for work in your city, sites like Indeed will help you find open positions in your area across all industries. That said, you may want to broaden your search to include remote or location-independent jobs. Sites like Remote.co, FlexJobs, and WeWorkRemotely may be helpful resources.
You should also network with your peers, coworkers, alums from your school, and professionals in the industries you’re interested in. The best way to start is by setting up a LinkedIn profile. On your profile, outline your experience in detail. Explain the duties you had at each job, internship, or volunteer position you took while in school. If you focused on academics alone, highlight relevant coursework and post samples of your work that prospective employers can look at.
You can also reach out to your school’s alumni network to connect with established professionals in your field. They may be able to give you advice on where to start and may even know of some great job opportunities!
2. Set a Budget Immediately
Setting a budget is a simple way to make sure you’re balancing what you’re bringing in from your job and side hustles with what you’re spending each month. There’s no right or wrong way to create your budget, so choose what works best for your situation. Many people use the 50/30/20 budget as a starting point.
Look at the amount of income you’re bringing in, the amount you’re spending each month, and what you’re spending money on. Ideally, you should spend significantly less than you bring in each month. This way, you’ll have money you can save toward things like emergency expenses, travel costs, and bigger student loan payments.
Once you have a budget in place, you’ll want to keep tabs on your spending each month. Online banking tools make it easy to keep track of where your money is going, so you never have to worry about blowing your budget.
3. Look at Your Debt Situation
Carrying student loans? You’re not alone. A few years ago, the Federal Reserve reported that the average student loan balance per borrower was more than $32,000, and that figure is growing. If your degree left you with student loans, take steps to pay that debt down as much as possible.
Check your student loan balances and make a note of the total payments you make each month. Then, factor in any other debts, such as credit card debt, an auto loan, or outstanding personal loans. Total those payments up and ensure they’re part of your monthly budget to make sure you have enough money set aside to pay the minimum balances each month.
4. Know (and Grow) Your Credit Score
Your credit score doesn’t just influence your ability to qualify for affordable loans. It can also be a factor in your ability to get an apartment and can even make it easier for you to get certain jobs. Check your credit score and monitor it for changes regularly. You can do this for free through AnnualCreditReport.com.
Your credit score will change based on the amount of debt you have, your payment history on those debts, and the length of your credit history. If you’re not happy with your score, you can help increase it by making regular payments on your debts, paying your bills on time, and avoiding opening too many new loans or lines of credit.
If you don’t have a credit score or want to build your score more quickly, a secured credit card will help you do just that. Think of the secured credit card as a credit-building tool. You deposit a set amount of money in the account. That amount becomes your credit limit, and you’re able to make charges up to that limit. When you make on-time payments to your secured card, your financial institution will report your responsible borrowing to credit-rating agencies, helping you establish credit.
5. Start Saving Now
When you start earning a regular paycheck, there’s a real temptation to spend every penny. Don’t. Instead, try to save at least a portion of each paycheck whenever you can.
The best way to do that is to contribute to a dedicated savings account rather than letting the money collect in your checking account. At American Heritage, our Share Savings Account can help you build your savings with ease. Once you start earning a paycheck, set up recurring transfers from your checking account to your savings – putting your saving on autopilot.
If you received any graduation gifts or holiday checks from relatives, consider adding those to your savings account rather than spending them. This way, you’ll build your savings faster and won’t have to worry about going into debt if unexpected expenses pop up.
6. Invest in Your Health
When you’re young and healthy, prioritizing health insurance may not seem like a necessity. Unfortunately, trips to the emergency room can cost thousands of dollars if you’re uninsured.
Rather than trying to save a few bucks each month by waiving health insurance from your employer, invest in coverage. If you’re self-employed or don’t have access to a plan from your job, you can buy coverage through the Federal Health Insurance Marketplace during open enrollment.
7. Start Saving for Retirement Now
Even if you’re young, start saving for retirement now, if you can afford to. If your employer offers a retirement account, open one and contribute what you can from each paycheck. Just adding as little as $100 per month will allow you to save $1,200 each year. And the sooner you start saving, the more time this money has to grow.
If your employer doesn’t offer a retirement account or you want to save more money each year, you can open one on your own. There are several flexible, tax-advantaged IRA options available.
Don’t Be Afraid to Ask for Help
The last thing any new college graduate wants to deal with is financial stress. At American Heritage, we’re here to help. Check out our Learning Center financial wellness program for tons of free financial tools and advice on key financial topics or stop by a branch today to speak with our team. We’ll show you just how easy it can be to take control of your finances from the get-go.