5 Financial Tips for College Graduates

Graduates smiling and holding diplomas. Photo courtesy of Shutterstock.

Getting your degree is a huge accomplishment, and as you leave college and enter the workforce, it is important that you get a firm hold on your personal finances. Unfortunately, some new graduates make unwise decisions, which can set them back financially. But this doesn’t have to be your reality.

Pay down student loan debt

Like most college students, your student loan lender probably allows 10 to 30 years to pay down your debt. Flexible terms result in lower monthly payments, which is a major plus as you adjust to life outside of college. But just because you have a decade or longer to pay back your loans doesn’t mean you should extend debt repayment.

Do whatever it takes to pay off your student loan debt sooner. Not only will you save a ton of money on interest, but once the debt is paid off, you can use the savings to build a comfortable nest egg.

Avoid new debt

There is nothing wrong with purchasing a new car if you need one, but with regards to credit cards, use them responsibly. Unfortunately, some college graduates accumulate a lot of debt post-graduation. They may use credit cards to furnish their new place, buy clothes or enjoy other luxuries. Credit cards are comparable to loans, thus you have to repay your creditor. If you max out your credit card, debt repayment becomes difficult.

Applying for a credit card is one way to build credit. If you use a credit card, always pay off your balance in full each month. This method can alleviate interest charges, plus you’ll avoid huge debt balances.

Think about retirement

Contrary to what you may believe, it’s never too early to start planning your retirement. The earlier you start saving, the more you’ll have in the bank during your retirement years. Getting started is simple. You can set up an individual retirement account through your bank or with the help of a financial planner, or you can take advantage of your employer’s 401(k) plan.

Acquire multiple sources of income

Don’t rely solely on income from your employer, anything can happen. Even if you’re a loyal worker, you may be laid off due to economic problems. Think of your passions and hobbies. Can you use your talents to start a side business? Don’t worry if you do not have much business experience. You can hire a business consultant to help you make some of the more challenging decisions that are required when starting your own company.  A consultant can teach you strategies and tips to get your business off the ground, plus assist with building your reputation and setting goals. Someone like Rich Gorman, who specializes in brand reputation is a good person to know when your brand takes a hit and you are in need of some help to get back on your feet.

Start a savings account

This particular savings account is separate from your retirement savings plan. Take 10 percent of your income each pay period and deposit it into a special account. This account is reserved for a rainy day. For example, you can use funds to fix a car repair, make home improvements or survive a job layoff.

Even if you didn’t learn budgeting and money management skills in college, it’s never too late to get your finances in order. Being financially fit can take you far in life, and the sooner you get serious about your money, the more you can achieve financially.