Smart Financial Tips for New College Graduates

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It’s May and time for college commencements! Congratulations to all the newly-crowned college graduates. You have worked hard to get to this point and deserve to take some time and pat yourself on the back for this achievement. The months ahead will be very exciting as you move on to the next phase of your life. It may involve travel, a new job, getting back together with old friends, or starting a new relationship.

Whatever path you take, money is certainly going to be a crucial factor in any decisions you make. You might have relied heavily on your parents to make financial decisions while you were in college, but now it is time for you to take control of your own financial situation. Here are some smart financial tips to get you started in the right direction:

• Get a Handle on Your Student Loan Situation Now: You might think it is still early and you have six months before you have to start worrying about repaying your student loans, but you will be surprised at just how quickly that time will pass. It is best to understand your situation now, so you can take some time to make decisions. Talk to your parents about how much they plan to contribute, and how much they expect your to repay. Put together a complete list of all your federal and private student loans, and find out what the repayment terms are on each. Calculate the total amount of monthly payments that will be due. If it is more than you think you will be earning, you may need to think about an income-based repayment plan or student loan consolidation.

• Draft a Real World Budget: You may think you lived on a budget in college because your parents gave you an allowance or covered your expenses, but that was nothing compared to real world expenses. Try to put together a realistic expectation of how much money you will be able to earn in these first few years after graduation. Take into consideration any living expenses, car and transportation costs, health insurance, and entertainment opportunities, as well as your student loan payments. If expenses exceed income, there are only two choices – increase income or decrease expenses.

• Watch Out for Easy Credit: It may seem easy to take out an auto loan or apply for a few credit cards to get you over any initial money shortages, but you do not want to start spiraling down into a debt cycle while you are so young. Interest builds up quickly, and it could soon take all of your disposable income just to keep up on payments. Try to control your purchases, or buy only within your means, so you can build a good credit rating for future use.

This is a very exciting time, and you should enjoy it, but don’t make poor financial choices that will just make things more difficult for you in the future.