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10 Pieces of Financial Advice a College Grad Should Know

One of my passions is personal finance and making it relatable for as many as possible, and trying to write about and highlight information that I think would be useful. I know when I was in college, I wish I would have had half the information available as there is now. With graduation season in full swing, I wanted to highlight an article that covered some great topics college grads should know as they enter the “adulting” world.

For some college grads, the below may seem like old hat, but just the same, I think it’s still useful advice. Lifehacker recently assembled some great topics for college graduates set to embark on this next chapter of their lives when it comes to personal finance.

Salary Negotiations

Knowing your worth in salary can certainly be difficult when you’re first starting out. However, there is still a bit of leverage that can be at your disposal. Valuable resources can include your college’s career center, as well as other recent grads in your industry. Don’t forget you don’t necessarily need to take the first offer that comes along. Glassdoor and Indeed can also provide some great salary research tools as well for comparable positions.

Hi Mom and Dad!

You’ve had your four years of freedom, so you may not be looking to necessarily head back to your original homestead. Don’t be so quick to knock it though. If it’s a viable option, and one your parents are okay with, it is definitely worth considering especially if you have a lot of debt. Saving on monthly rent payments can let you save money and pay down loans and other debt at an even fast pace.

I’ll See Your 3% Contribution and Match It!

If your new employer has a retirement plan, you will be needing to decide how much of your pay you want to contribute. More than likely, your employer will also match however much you’re contributing up to a certain percentage. If you can, make sure you are contributing at least enough to get that full match. If they offer a 3% match, then contribute 3%. Anything else will be leaving money on the table, and that interest should in turn compound considerably with time.

To Roth or Not To Roth

You might also consider a Roth IRA as another investing option. In this particular type of account, you can contribute up to $6,000 per year and best of all, not have to pay any taxes on any gains when it’s withdrawn in retirement.

Health Insurance

Similar to moving back home, if it’s an option for you, highly consider staying on your parents’ health insurance as long as possible. If not though, really make sure you go through your employer’s options with a fine-tooth comb to see what is right for you. You might not need the most expensive plan if you don’t foresee necessarily needing a low deductible. Lifehacker also has a great post on health insurance terminology as well.

Credit Where Credit Is Due

While many will argue you don’t need a credit score for purchases, a good credit score will certainly assist you, if needing to take out a loan. Of course, paying for items in cash is always an option, but everyone’s situation is different. Certainly exercise responsibility, and again go over everything with a fine-tooth comb, as many lenders are looking for new clients with all sorts of marketing tactics, especially those just out of college.

You Need A Budget

Okay, so that headline was also a play on for one of my favorite pieces of budgeting software. But it’s also true. You need to know how much money you’re spending and on what. In addition to YNAB, many also follow the 50-30-20 rule of 50% for needs 30% for wants and 20% for savings/debt payment if ascribe better to allocation suggestions.

Hi, It’s Me, Your Student Loans

If you were like many other college students, more than likely you had to take on some loans to pay for college, but if not, even better! Generally, once you’ve graduated, you get a six-month grace period before you need to start paying back your loans. Definitely sit down and figure out how much you have in federal vs private loans, compare the respective interest rates, and make a plan of action for paying those off.

Maybe Reconsider That New Set of Wheels?

If you’ve driven by a car dealership lately, you’ve probably noticed it is pretty empty. Due to inflation, now is probably not a great time to get a new or even used car. If this is a non-negotiable though, remember to factor into your budget any reoccurring line items such as car insurance, gas, and frequent vehicle maintenance. I highly recommend the Pay With Gas Buddy card as a great way to save a little bit on current prices.

Don’t Forget To Have Fun

Saving money is always great, and important for your future, but don’t forget you can also save for fun too. If you know you have a big trip, or concert coming up, you can just take the total price of your purchase, divide it by how many months until the money is needed, and then just save that amount per month.

That said, I just wanted to wish all new graduates all the best in this new chapter in their life! Remember, one can not have enough education, always be learning!

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