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Financial tips for living on your own after graduation

The first six months after graduation are a key time in a college grads financial life so whether you are the graduate or have a child graduating there are a few financial steps that can really improve the probability of having long term financial success. Don’t make early mistakes that can lead to a lifetime of financial setbacks.
What should be a college grads first step after college graduation?
Develop a budget that is realistic based on the job they have or hope to get.  The budget will then help them decide where to live, what they can afford in the way of transportation and a several other important decisions that have to be made when first graduating. Without a real budget, college grads often end up renting apartments they can’t really afford and spend too much on buying a car.
After they have developed a budget, what should come next?
The next most important step is to develop a spending plan.  Even though they have a budget, if there is not a disciplined spending plan in place for the discretionary money in the budget, college grads tend to run out of money and start using their credit card to fund everyday purchases to get to the next paycheck.  It is very easy to spend the money we have today and worry about tomorrow later when we have access to credit cards.
How does building good credit factor into long term financial success?
It is a critical step.  Having good credit can be beneficial in many ways from lowering the interest you pay on car loans or mortgages to helping lower the cost of other expenses like insurance.  Plus, handling credit wisely can help grads avoid being in too much debt when they are first starting out. 
What’s the best way for new grads to build a solid credit history?
Build credit by paying all bills on time and not carrying balances over on credit cards.  Charge and pay off all balances in the same month.  Also, don’t open too may credit cards or store charges and avoid the no interest no payments for 2 year offers when buying apartment furnishings.
What else can college grads do to be financially successful?
Find ways to lower expenses on everyday purchases so using coupons and loyalty reward cards for groceries and when eating out.  Keep the thermostat set a little warmer in the summer and a little cooler in the winter to save on utility bills.  Learning to find ways to cut costs is a great financial habit to start as early as possible.
What types of saving funds should college grads establish?
First and foremost, immediately enroll in the 401k plan if your employer offers one.  This is the most important savings plan to establish.  Next, start building a rainy day fund using some type of automatic savings option and if you want to really go the next step, establish savings accounts for big upcoming expenses such as vacation, weddings, or buying a home.

Posted: 5/6/2015 with 0 comments

Categories: Kids and Money, Money Matters, Students

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