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Post-Grad Money Moves: A Guide to Smart Financial Habits

By: American Heritage05.30.24
Young man standing in airport looking at board of destinations.

College graduation is a significant milestone—the culmination of years of dedication and hard work. As you step into the next chapter, financial independence becomes a critical factor in shaping your future. This article can help you navigate the exciting yet sometimes complex world of personal finance. By managing your finances wisely from the start, you can steer clear of common pitfalls and set yourself on a path toward fulfilling your long-term financial goals.


Creating a Budget

Think of a budget as your financial GPS. It tells you where your money is going, where it should go, and how it will get there. Track your income (paycheck, side hustle earnings, etc.) and expenses (rent, groceries, that daily latte habit) for a month to see where your cash is flowing. Then, categorize your spending (essentials, entertainment, debt payments) and set realistic limits for each category. Here are some popular budgeting strategies to consider:


  • The 60-20-20 Rule: This method allocates up to 60% of your paycheck to housing, groceries, healthcare, transportation, and other essential living expenses. At least 20% of your income should go into savings for emergencies and future goals. The remaining 20% is your “fun money” for entertainment, dining out, or hobbies.
  • The 50/30/20 Rule: Like the 60/20/20 rule, this approach allocates 50% for needs, 30% for wants, and 20% for savings and debt repayment.

Budgeting isn’t about depriving yourself. It’s about empowering yourself to make informed choices about your money. Choose a strategy that fits your lifestyle and adjust it as needed.


Tip: Use budgeting apps to categorize your spending automatically and pinpoint where you can save.

Building an Emergency Fund

Life throws curveballs—car troubles, unexpected medical or dental bills, or a job loss. That’s why an emergency fund is crucial. Experts recommend saving three to six months’ worth of living expenses. Every little bit counts, so start small and make automatic transfers from your checking to your savings account. Even $25 a week adds up fast!


  • Savings Account: With a traditional savings account, your money will be readily available when you need it. This makes it ideal for emergencies where you need cash quickly.
  • High-Yield Savings Account: To get a higher interest rate, consider a high-yield savings account that can increase your savings but also allows you to withdraw the money if necessary.
  • Money Market Account: Money market accounts are a hybrid between a savings account and a checking account. They earn a higher interest rate than traditional savings accounts and give you access to funds through checks, debit cards, and online transfers. This can be useful if you need emergency cash fast.

No matter which option you choose, remember: Your emergency fund is there for emergencies, not everyday expenses.


Tip: If you need to make an urgent payment but can’t access cash, charge it to your credit card. Quickly pay off your credit card using your emergency fund to avoid interest fees.

Paying Off Student Loans

Many graduates face student loans. Having a plan to pay them off is crucial for financial freedom.


  • Understand Your Loans: First, gather information about your loans. Are they federal or private? When do your grace periods end and repayments begin? Most importantly, what’s the total amount owed and the interest rate on each loan? This information is typically available online or through your loan servicer.
  • Explore Repayment Options: Not all student loans are created equal. Federal loans often offer income-driven repayment plans and potential forgiveness programs, while private loans typically have stricter terms. Research the different repayment options available to you based on your loan type. Consolidation, which combines multiple loans into one with a potentially lower interest rate, might also be a good strategy to explore.
  • Build a Strategy: Once you understand your loans and repayment options, it’s time to build a strategy. Factor your student loan payment into your budget from the very beginning. Look for ways to accelerate your repayment, perhaps by using bonuses or tax refunds to make additional lump sum payments toward the principal amount. This will save you money on interest in the long run.


Tip: Look into loan forgiveness programs if you work in public service or for a nonprofit.

Managing Credit Card Debt

Credit cards can be a useful tool, offering convenience and the ability to build credit with responsible use. However, they can quickly become a financial burden if the temptation to use them is not managed carefully. Here’s how to avoid the slippery slope of credit card debt:


  • Live Within Your Means: This might sound obvious, but responsible credit card use is the golden rule. Use your card for only purchases you can truly afford to pay off in full by the next billing cycle. Avoid impulse buys and resist the urge to use plastic to cover everyday expenses.
  • Beware of Minimum Payments:  The minimum payment on your credit card statement is the minimum amount required to keep your account in good standing (for now). However, making only minimum payments can trap you in a cycle of debt for years to come. Interest rates on credit cards can be high, so the longer you carry a balance, the more you’ll end up paying.
  • Develop a Payoff Plan: If you already have a credit card balance, prioritize paying it off as quickly as possible. Consider creating a budget that allocates extra funds toward your credit card debt each month. Every additional dollar you pay goes toward your outstanding balance, reducing your overall debt and saving you money on interest.


Tip: If you can swing it financially, aim to pay twice the minimum payment each month. This will significantly accelerate your debt payoff and save you money on interest charges in the long run.

Saving for Retirement

It might seem like retirement is a distant dream, but it arrives faster than you think. The key to a secure and comfortable retirement is to start saving early. Thanks to the magic of compound interest (interest earned on your interest), even small contributions you make in your 20s can grow into a significant amount by the time you retire.

Here’s how to get a head start on securing your future:


  • Start Early, Even If It’s Small:  The power of compound interest is undeniable. The earlier you start saving, the more time your money has to grow. Even if you can contribute only a small amount each paycheck, it’s a solid first step.
  • Take Advantage of Employer Plans:  Many employers offer retirement savings plans like 401(k)s. These plans allow you to contribute pre-tax dollars, reducing your taxable income and maximizing your savings potential. Plus, many employers offer matching contributions, giving you free retirement money! Be sure to contribute at least enough to capture your full employer match – it’s free money you can’t afford to leave on the table.
  • IRAs: If your employer doesn’t offer a retirement plan, or you want to save even more, consider opening an individual retirement account (IRA). IRAs offer tax advantages similar to 401(k)s and come in two main types: traditional IRAs and Roth IRAs. Consult a financial advisor to determine which option is best for you.
  • Savings Target:  While there’s no one-size-fits-all answer, a common savings target for retirement is 10% to 15% of your income. This is a good starting point, but you may need to adjust it based on your individual circumstances, retirement goals, and risk tolerance.


Tip: Treat windfalls and bonuses like tax refunds as opportunities to boost your retirement savings.

American Heritage Credit Union Is Here to Help

Navigating your finances post-graduation can be challenging, but you don’t have to do it alone. American Heritage Credit Union is here to help you manage your finances and save for the future. Explore savings options on our website or reach out to us for more personalized advice.



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