Tis’ the season when many young people are leaving their academic lives and stepping out into the working world. It’s also an opportunity for college graduates to make financial moves that can help them set a financial foundation that will serve them for the rest of their lives. “There are a wealth of resources available for recent college graduates looking to build their financial prowess,â€ says Shelly-Ann Eweka, a certified financial planner with TIAA. “In today’s connected world, financial advice can be consumed by reading relevant articles, utilizing online tools and calculators, scanning brochures, or watching videos,â€ she adds. Eweka shared with BE.com,Â fiveÂ essential steps college grads should make when they’re first stepping out.
- Don’t run up huge amounts of debt: In addition to student loans, many millennials might feel like tacking on a few more loans for car payments or credit card purchases won’t hurt. In reality, if they don’t have a strong, reliable source of income with which to pay off those loans on schedule, the interest rates from those loans could come back to haunt them. One rule of thumb: don’t borrow more than your expected entry-level salary.
- Plan for the future: Things like weddings and down payments for a home can occur suddenly, and without the right savings in place, they can set unprepared millennials back quite a ways. The same goes for unexpected emergencies like job loss or a broken-down car. A good emergency fund should cover three to six months of living expenses.
- Be strategic about graduate education: It’s important for millennials considering grad school to weigh the job placement rates and average starting salaries against their financing and student aid options to see if the math works out. A few good options might be attending part time or finding research or teaching work in order to avoid more student loans.
- Â Don’t leave free money on the table: Many millennials neglect to enroll in their employer-sponsored 401(k) or 403(b) plans, and end up leaving free money on the table. Take advantage of this workplace benefit, and get ahead with retirement savings in this nearly effortless way. While retirement may seem far away when you are busy finding your first job,Â there is no such thing as starting to save too early.
- Meet with an adviser right after graduation: It’s a perfect time to cover the basics and hash out a plan as you embark on this next stage of life. Advisers can help elaborate on key principles and can explain how those particular options and strategies can fit into your personal financial plan.