6 Money Tips for College Graduates

college graduateIn another couple of months, universities and colleges will be turning out another fine graduating class. It’s been well over a decade since I left the halls of higher education. I would say that I’ve had my share of successes, but I certainly could be tons more successful if I’d followed these six tips for college graduates.

Start Your Budget Right Now

Assuming you have a job and are not moving back in with Mom and Dad, start tracking your monthly expenses vs income. It’s the only way to know what you can afford and what you might be wasting money on. You’ve graduated. There is no need to be cool anymore. Get out the spreadsheets.

Get Student Loans in Perspective

If you have student loans, you’ll have a six month grace period before you have to start paying them back. Determine how that monthly payment fits into your budget, and start setting it aside now. If you get used to spending it, it will seem like a sacrifice when it actually kicks in. Better yet, there is no law that says you can’t go ahead and start making student loan payments.

Think really long and hard before you consolidate into a longer term loan. I consolidated because my interest rate started to rise. I assumed I would still make the same payment and have the loans paid off in 10 years or less. I did not do that, and still have student loans until this day. My husband is a teacher at a Title I school. Some of his loans could have been forgiven if he hadn’t consolidated. Look at your profession and see if there are any breaks or forgiveness programs before you do anything else.

Save Up Some Money

Your new paycheck is not to be spent buying drinks for the entire bar. While that might make you cool if you still need that gratification, it makes you much cooler to have money in the bank. You never know what might happen, and if you have no savings, that’s when credit cards become dangerous.

Also, you may want to buy a house. While there are first time homebuyer programs that let you buy with a small down payment, you still need a stash to deal with home repairs or household expenses that you don’t have as a renter. My advice would be to save up a sizeable down payment and a house repair fund. Interest rates aren’t going anywhere for a while. You will have plenty of time to save up and still find a house if that is your goal.

Start Saving for Retirement

I know you just started working, but trust me on this. The more you can put away in your twenties, the less you will have to catch up later. You are used to being broke, so you aren’t going to miss this money. Take my advice and start putting away 15-20% right from the start.  While you may have no problem working more than 40 hours per week now, your priorities will change, and it’s better to have a large nest egg if you want to change career paths down the road.

Get Health Insurance

Yes, you are young and healthy, but accidents happen. The first year into my real job, I had a knee injury that would have been over $10,000 out of pocket if I hadn’t had health insurance. A huge medical bill can certainly derail your plans. If your employer doesn’t offer it, shop around, and consider a Health Savings Account to save on taxes.

Avoid Payments Like the Plague

Obviously, buying a house will  likely create a mortgage, and you probably have student loan payments. Don’t take on any more. Here is where you have to put on your blinders and turn on the superhero powers. Everyone is marketing to you. Car dealerships will be running college graduate specials. Furniture stores are offering same as cash for 18 months. Credit card offers will start rolling in. Don’t buy it. Every payment plan you take on eats away a bit of your freedom.

Right now you have the ability to do anything you want, but the more debts you take on, the more you are ensuring that you’ll be living to work. Let your new job bring joy and fund your all of your life’s desires. Believe me, after year 3 or 4 of making payments, you likely can’t remember what you bought or why you though you needed it. Working to make payments is a great way to lose whatever motivated you in the first place. You can believe my advice because I’ve lived through it.  Luckily, I am almost on the other side, but some people never get there. Your financial future comes from choices you make right now. It’s much easier to make smart financial decisions from graduation on than try to make up for poor choices later. Choose wisely, graduates!

What advice would you give to yourself as a new college graduate?

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Written By
Sydney White is a Texas-born stay at home mom who enjoys spending time with her family, bargain hunting and, of course, writing. She is currently the editor-in-chief of Snipon.com.

36 Comments

  1. You hit the nail on the head with “Start Saving for Retirement” NOW! When we graduate college we don’t think of retirement since we are “starting” our life. But, studies show the earlier you start the better off you are (time value of money). Anyhow, it is easier to get into the habit of stashing a larger percentage of your salary in 401k, stock options, additional savings, etc. The first step I suggest all college grads who get a job to do is sign up for 401K immediately and start at 10% of your salary. Each year move it up a percentage or equal to the merit base raise you get.

    Most college grads will leave their first job onto a second but starting to save for retirement with your first employer will follow you to the 2nd, 3rd, etc.

  2. Really good tips! I’d say learn to cook! You can save so much money over eating out and be healthier too. Freeze leftovers for night’s you don’t feel like cooking. Yes, live like a broke college student as long as you can. Get an emergency fund going for when, not if, you are between jobs–it happens. Pay a low amount of rent, sharing a place if at all possible. Take public transportation if you can or share a ride. Take your lunch to work and skip the Starbucks. Make your own coffee!!!

  3. I was surprised when I graduated that many of my classmates (myself included) really lacked direction. Our parents, friends and advisers told all of us to do what we love. We didn’t work hard enough to figure out whether or not that and the degree we received would actually translate into a real job. I got lucky but, many of my friends are still unemployed.

    Perhaps more important than getting the right loans, finding a preferred interest rate, cutting spending, saving, and taking part time work at school is figuring out what you want to do and making sure you can actually do it.

    Not to poke fun at anyone but, the university I went to had a pop culture major. Aside from the highly dedicated members of that group, how many actually received job offers? I am incredibly impressed by my colleagues in the history major but, who’s hiring history majors right now?

    It’s all about finding that balance between something you love, like or find you’ll probably grow to love and what will actually translate to a career. I’m not talking about what’s the hot market now but, something that actually is a career and will be a career. The minor, extra curricular, study abroad, clubs and volunteer work will allow for that exciting, outside the box experience.

    1. I agree there are some pretty stupid majors and classes for that matter. They actually offer a class at the local university called “The Psychology of Pornography.” Really, unless you are going into smut mag publishing or adult film production, is that something that is going to help your career?

  4. Invest! buy a house if you can afford it, something small, just to stop paying rent. Invest in your retirement fund, and in the stock market. Time will work in your favor.

  5. Excellent advice, Kim. When we graduate from college we feel on top of the world and invincible, but if we don’t manage our money properly, we’re actually pretty vulnerable. I wish all graduates and their parents had these tips to help guide them.

    1. I certainly felt that way. I wish I’d know or thought to figure some of this out before buying lots of stuff and getting into debt.

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