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Financial Literacy Tips for Recent College Graduates

Graduating from college opens up a world of opportunity and discovery. However, navigating the post-grad world can seem overwhelming regardless of if you have your future all planned out or things are still up in the air. With all the freedom you are about to experience, a whole lot of responsibility comes with it.

With April being Financial Literacy Month and graduation right around the corner, now is the perfect time to highlight the reasons why you should invest in your financial literacy skills. Here are some tips for managing your money and your budget as you get ready to enter the post-grad world.

Choose the right bank account for you

Having a strong understanding of your financial literacy starts with having the right tools. One of the basic financial tools is a bank account. Chances are you already have one, but it is important to know what type of account you have. Researching alternative banking options may show you that there is an institution better suited for you. Be sure to look at things like interest rates, fee schedules, and online banking services. In addition, make sure you have access to your accounts via online banking, as this will be a major plus if you are someone who is usually on the go.

You may also consider the benefits of doing your banking at a credit union instead of a bank. Banks are for-profit institutions, meaning the profits of the business go into the pockets of those in charge. Credit unions are not-for-profit institutions, meaning the profits funnel back into the business via things like low-interest rates on loans and high-interest rates on savings accounts. You will also find there are fewer fees at credit unions than there are at banks.

A downside to banking at a credit union is they are generally regional and have membership restrictions. Many national banks could have ease of access, which might serve you better if you feel you need to visit a brick-and-mortar location. With the technology of modern banking, you can fulfill almost all your banking needs in the comfort of your own home.

Manage your student loans

If you don’t take the time to prepare, your student loans will sneak up on you. Although you have a loan grace period that starts after graduation, it is important to know when that ends and when your payments begin. The grace period is also a great opportunity to prepare yourself for these impending bills. During this time, you should set up a savings account that you deposit your monthly student loan payment into. Making this a habit will help you understand how your loans will impact your budget. When creating this account, you will deposit money and let it sit there, no transferring for shopping or paying other bills. This money will create a cushion for the times your budget does not add up and you need help making the student loan payments.

Currently, there is a pause to federal student loan payments until the fall. This means your loans don’t gain interest and there is no payment due until the moratorium ends. People who have the budget and liquidity to continue making payments during this time can do so and bring those loan balances down faster. Conversely, those that feel the financial pressures of the pandemic can take a deep breath knowing they don’t have to worry about these loans for the time being. With the state of loan forgiveness constantly up in the air, you should not rely on the potential of loan forgiveness. Instead, prepare to know exactly when your loans are due and where you can pay them.

Think of your future

Once you leave your college dorm or apartment, you may find yourself back in your childhood bedroom feeling like you are starting from square one. However, square one isn’t a bad place to be, as it gives you a clean slate to work with and figure out what you want to do with your future. Setting goals for yourself, both financially and otherwise, will help you feel like you are on track for success. This could be finding the right job, applying to graduate school, moving out of your parents’ house, or saving up to buy your own home.

With any long-term goals you make, consider making smaller goals that you can achieve on a more frequent basis to help keep you on track. For example, wanting to make a big purchase like a house could take a good chunk of time to achieve. Making up a monthly goal of how much money you want to put away in savings can make each step feel like a success. In addition, creating a separate savings account for major purchases will help you keep track of how much money you are actually saving. Saving money and coming up with a budget you are comfortable with is key to making smart decisions when looking to buy a home.

When the time is right, applying for a mortgage preapproval will help you stay within your budget and make sure you aren’t over-extending yourself with loans you cannot afford. Saving and prepping to buy a home may take more time than you think. The last thing you want to do is enter this new phase of your life with debts you cannot afford to pay, so finding a home that you can manage to maintain without breaking the bank is vital to your success as a homeowner. 

Creating your ideal post-grad life isn’t going to happen overnight, and there will be bumps in the road along the way. Organizing your goals and making strides to crossing items off your list will help you see that you can attain the life you want.

Secure a job with the right benefits

With all the time you spent working on your degree, finding the right job to match your goals and your desires is important. Searching job boards for a position and a company that seems right for you can become both overwhelming and frustrating if you are not sure what to look for. Consider using sites like Glassdoor to see employee reviews of a company. They can comment on the effectiveness of management, wages, benefits, and work-life balance to give you a good idea of what the company is like. You can also see if there is the opportunity for upward mobility, which may be helpful when you are looking to apply for an introductory position right out of college.

One of the first things you look at when considering a job offer is compensation. While your salary is a major part of why you may accept or reject an offer, the benefits they offer should also factor into the decision. Knowing if they do 401(K) matching, provide comprehensive health insurance, have a good PTO plan, and promote a healthy work-life balance can be key to feeling confident in the company or it may solidify that they aren’t a good fit for you after all.

Should the salary not be exactly what you are looking for, negotiating and advocating for yourself may drive up the offer. If you are starting at an introductory job with an introductory wage, knowing if the company has a career development path or chatting with their current employees can help you decide if this is the right job and employer for you.

Life after graduation is full of possibilities. Making sure you set yourself up for success by maintaining your financial responsibilities and reaching your financial goals will be key to making life that much more satisfying.

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