What to do After Graduation? Get Your Financial House in Order

What to do After Graduation? Get Your Financial House in Order

Congratulations, you’ve graduated! Perhaps you have a new job or are in search of one, living at home or finding a place of your own – no matter what your situation, it’s time to start getting your financial house in order. These tips can help lay the foundation for a secure financial future:

Create a budget. To plan effectively, you’ll need a clear picture of what you have, what you’re likely to spend, and how much you owe. Start with your net income (after taxes) and subtract all of your essential expenses like rent, groceries, and utilities. This will help you determine how much you can spare for leisure activities, to pay down debt, or to make a major purchase. Budgeting apps make it easy to a create a monthly budget and track your spending.

Pay down debt. If you’re among the nearly 70% of student graduates with student debt, start by itemizing exactly what you owe. If you think you won’t be able to make your payments, look into loan refinance options. If you’re earning enough, consider making extra payments to fast-track your payoff time. If you have other loans such as credit card or auto loans, prioritize paying off the highest interest debt first. If loved ones have co-signed your loans or would otherwise be responsible for your debts if something were to happen to you, consider a life insurance policy that covers your debt.

Work on your credit. A credit card can work to your advantage. Consistent, on-time payments positively influence your credit score. Your credit history will become one of the most important parts of your financial profile when it comes time to apply for a mortgage or even when applying for a job. Get into the habit of checking your credit report now. If you find a mistake, notify the credit agency and follow up to ensure it’s resolved.

Start saving now. Make savings a top priority, even if it’s just a little each month. Ideally you’ll save enough to establish an emergency fund; experts recommend starting with enough to cover 3-6 months of living expenses. If you can’t quite manage that, start by putting aside a few hundred dollars for emergencies. If your employer offers a retirement plan like a 401(k), try to maximize your contributions. If your employer doesn’t offer a retirement plan, you can open an Individual Retirement Account. You may be a long way off from retirement, but the time to start saving is in your twenties when you’ll reap the maximum benefits of compounding.

By getting your financial house in order now, you can set yourself up for a strong financial future. While you may not be able to do everything at once, the guidelines above can help set you on the right path.