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Financial Tips for Recent Graduates | Tips from our Advisors About Managing Your Money After Graduating Thumbnail

Financial Tips for Recent Graduates | Tips from our Advisors About Managing Your Money After Graduating

Congratulations, Grad! Now that all your hard school work and long study hours are behind you, it’s a great time to start thinking about taking control of your finances. Whether you are starting to pay rent on an apartment in a new city or are planning to start repaying your student loans, you should start tracking your finances and understand how to maximize them. Keep reading to discover tips and tricks to help you as you enter the “real world” and start your journey toward financial independence.

Create a Budget

One of the first and most important steps to help gain control of your finances is to create a budget. Start by listing your income, whether it be from your job, a side hustle, or another avenue. Then, list your expenses including rent, transportation, groceries, utilities, student loans, entertainment, etc. One you understand money you have coming in and money you have going out, you can allocate it accordingly. The 50/30/20 rule is great to keep in mind when doing so. Aim to spend 50 percent of your income on your essentials like rent, loan repayments, groceries, insurance, utilities, etc. It is recommended to save 20 percent of your income into an emergency fund ,401(K), or others savings account. The remaining 30 percent can be spent on nonessential things like eating out, shopping, travel, etc. There are several budgeting apps out there that may be useful to help you create your budget. 

Cash Flow walk-through

Build an Emergency Fund 

An emergency fund is important and helpful to have when large, unexpected expenses arise. By having an emergency fund, you can use money you set aside without having to dip into savings accounts or turn to credit cards. A general guideline to an emergency fund is to have three to six months’ worth of living expenses saved. It’s okay to start small, but it is important to make consistent contributions into a specific savings account to reduce the chance of spending the allocated money.

Tackle Student Loans

Nearly 43 million American have some sort of student loan. That is about 13% of the population1. If you are a part of this statistic, it’s key to take your loans into consideration when planning your financial future. You can start by understanding the details of your loans, including repayment plans, interest rates, forgiveness eligibility and grace periods. Then, create a plan to pay them off efficiently without sacrificing your financial well-being.

Think About & Obtain Insurance 

Let’s face it, insurance is not the most exciting thing to start thinking about, however, it is extremely important to have. There are many different types of insurance and costs associated with each one.

Health insurance is the most important of them all, whether you get it through your employer, your parent’s policy (until you turn 26), or through a marketplace plan. Auto insurance is required if you have a car and can help save you from large costs if you are ever involved in an accident. If you are moving into a new apartment, it’s a great idea to get renter’s insurance as it is often inexpensive and insures your belongings in case of theft and/or damage. It’s also a good idea to consider disability and life insurance as you move forward in your career and begin to start a family.

Start Saving for Retirement 

You may be thinking, “I’m just starting out in my professional career, why do I have to think about retirement?” The earlier you start saving for retirement, the more time your money has to grow. Be sure to explore your employer’s retirement plans and take advantage of them as soon as possible, especially if they match contributions.

Think about opening an Individual Retirement Account (IRA) if your workplace does not offer a plan. Traditional IRAs are tax-deferred, meaning that you don’t have to pay taxes on the amount until the money is withdrawn. Roth IRAs allow tax free withdrawals in retirement. It can also be helpful to look into savings accounts that offer compounding interest. This is where you earn interest on interest you’ve already been paid. For example, an investor invests $1,000 earning 8% interest annually. With simple interest, an investor would have $3,400 at the end of 30 years. With compounding, an investor would have over $10,0002.

Set Attainable Financial Goals

Now that you’re on your own, the choice is yours regarding what you’d like to save up for and spend your money on. Whether it be saving up to travel the world, a down payment on a house, retiring early, or starting a business/ side hustle, it’s important to set financial goals.

In order to make sure these goals are attainable, start with small steps and don’t shy away from modifying them as your life changes. Celebrate milestones along the way and regularly review your goals to keep you on track to achieve them.

Seek Professional Financial Advice 

Doing research and educating yourself is a great start, however if you find yourself wanting more information or another opinion, a financial advisor is a great resource. Many offer free consultations and can provide personalized guidance based on your situation. They can help you with investment strategies, retirement planning, and guidance uniquely tailored to you.
Find an advisor 

It may feel scary starting your post-grad life, navigating new jobs, people, income, and expenses. Don’t be afraid to make mistakes and learn from them. Setting yourself up with knowledge and good financial habits is key to lasting success.


1: https://www.nerdwallet.com/article/loans/student-loans/student-loan-debt

2: https://www.nrsforu.com/rsc-web-preauth/articles/power-of-compounding#:~:text=Compounding%20adds%20up,investor%20would%20have%20over%20%2410%2C000.

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