Spring is here, and that means a change of seasons from winter doldrums to feelings of renewal and reinvigoration. As a college senior, this can be a literal “spring ahead” for you, too, as you get ready to move on to the next phase of your life. Whether you plan to continue your education, find your first “real” job, or just take some time to consider your next moves, won’t it be great not having to worry about applying for financial aid or filing the FAFSA ever again?
While it might seem like you have plenty of time to think about these things, May is just around the corner, too. Before you know it finals will be over and you’ll be marching down the aisle to pick up that diploma. Then it’s time to celebrate your achievement, but what happens after that? Well, then, you might be confronted with the first real stages of your adult life. Before your new future can overwhelm you, here are a few final money lessons that will help you get a head start on your financial wellness:
• Run the Numbers: If you’ve already got a job, do some quick calculations to determine how much money you will be taking home after all your taxes and other deductions. Then really think about what it will cost you for living expenses. If you’re moving back in with mom and dad, that probably won’t put a hole in your pocket, but moving out on your own too quickly can burn through any graduation money you might have. You’ve got to take into consideration any first and last month rental payments, a security deposit, and utility set-up fees, not to mention furnishing your apartment and buying your initial supplies. If the numbers don’t make sense, look for a roommate or go back home until you can get on your feet.
• Don’t Rush the Big Purchases: You might be tired of running that old jalopy, but it probably still has a few miles left in it. Assess your money situation first before signing up for three to five years of monthly payments. And maybe hold off on that big vacation you promised yourself as a reward. Not only will you be spending money, keep in mind that you won’t be earning money either like you do when you have a job and go on vacation.
• Watch the Credit: Many recent college grads put themselves into a money bind too quickly by loading up purchases on their first credit card. Chances are it comes with a hefty interest rate, and will be difficult to make payments. As the months roll on, you’ll find yourself making payments that only cover the interest, and don’t reduce your principle. Then you’ll be in a real world of hurt if you do decide to try to buy a car, get married, or start to look at homes.
• Get a Handle on the Student Loans Now: You have probably heard about the student loan debt crisis, but a lot of that comes from the fact that many college grads forget about their student loan obligations, and then make mistakes with the first three items listed here. Six months down the road the student loan bills start rolling in, and they have no plan in place to address them. Their normal bills keep coming, the new bills are added to the heap, and problems begin. Figure out now exactly how much money you owe in student loans, look at your projected income, and learn about any repayment and deferral options so you won’t be another name added to the student loan crisis list.
It can be a lot of pressure to try packing a lifetime of financial lessons into a few short months, so take your time, talk to your parents and other adults who have successfully met their money challenges, and get a solid plan in place for yourself. The decisions you make now could have long-term repercussions on your financial options, so make wise choices. Congratulations and good luck as you begin this next stage of your life.