Today’s college graduates are starting out with higher college debt and difficult job markets. These circumstances affect their ability to establish financial independence. How can college grads overcome these obstacles as they stumble into adulthood? Here are six financial tips that can help.
1. Make a budget.
Creating a budget has never been easier, thanks to smartphone apps like mint.com. However, people generally avoid the tiring task of calculating monthly income and expenses. First, determine your known expenses, such as rent, cell phone service, car payment, and utilities. Then, track your spending on luxury costs, such as entertainment and clothing. After this, consider your long term goals, and determine if you need to change your spending habits.
2. Create a plan to repay college debt
When you create a budget, don’t forget to include the repayment of your college loans. Graduates with a higher income can work to pay off their debt more quickly, while graduates with a lower income may have to tackle their debt in a slow and steady fashion.
3. Pay yourself first.
Savings accounts are extremely important. It’s also important to contribute to some type of 401k or other retirement savings plan.
4. Contribute to a Roth IRA.
Roth IRAs are tax-favored savings plans, and they’re great tools to build wealth. They also have provisions allowing access to funds for education spending.
5. Establish credit.
Get a credit card with a low credit limit and start slowly building your credit. Having a positive credit rating will help you save money on car loans, home mortgages, and future life insurance.
