Here are a few helpful tips to get recent college graduates off to the right start financially:
- Start a retirement plan such as a 401(k) or a similar plan offered by employers. Ideally, at least 10% of salary should be allocated to this fund as a way to plan for the future without much extra thought.
- Avoid debt. Period. This goes without saying. Debt can hinder possible career options especially given the increasing number of employers checking credit reports.
- Create a budget to avoid impractical expenses. Knowing how much money, per month, is available for spending on the essentials and not-so-essentials allows college grads to stay on track. Here’s how
- Create an emergency fund by setting aside 3-6 months of living expenses in a money market mutual fund or bank savings account.
- Build credit the right way to benefit from credit card perks while maintaining a healthy credit score. Avoiding credit altogether leads to missed benefits while overusing credit destroys credit scores, making purchases more expensive.
- Take advantage of online banking to keep track of spending. Download the bank’s app onto a mobile device for easy access to the information that will keep budgets in check.
- Buy health insurance from an employer. If grads are no longer on their parents’ healthcare plan, purchasing health insurance is an important next step to safeguard against medical expenses. Single plans or small business group plans are available for those who are self-employed.
- Spend (on the right things) like life experiences that will create memories for years to come. Traveling with friends, exploring the world, or even discovering more immediate surroundings can be a worthy use of money at this stage in life. Just be sure to prioritize which experiences are worth the money.