How Recent Grads Can Set Themselves Up for Financial Success

Graduation season is an exciting time for many families.

Whether it is a college, high school or vocational graduation, this occasion often marks the beginning of a new stage in the graduate’s life.

As graduates mature into adulthood, their financial responsibilities will only increase. Here are tips to help recent graduates set themselves up for financial success.

Start with a Plan

As your career gets underway and you begin bringing in a steady income, it is vital to ensure you have a budget and plan in place.

Post-graduation can come with many costs, like finding and furnishing an apartment, so it is important you aren’t overextending yourself as your paychecks begin to come in. Whether you use a budgeting app or your online and mobile banking for tracking purchases, make sure you are keeping a close eye on your spending and saving.

If your budget is in a good place, consider setting aside extra income in an emergency fund. A good rule of thumb is to try to build three to six months of reserve funds in case of an emergency like a medical expense or loss of income.

Set Your Goals

Set both short- and long-term goals and ensure they’re measurable and trackable to keep you on the right path.

If you want to save for a new car in the next three years, decide on a budget for the vehicle and work your way backward to plot out how you can save for the upfront funds needed. One good way to accomplish this is to pay yourself first by having a portion of your paychecks direct deposited into a savings account that is separate from your checking account used for daily purchases.

Accounts like money markets and certificates of deposit (CDs) typically offer higher interest rates than a standard savings account and could be a good place to build your savings, depending on how frequently you will need to access the funds.

And don’t forget long-term goals like retirement! Taking advantage of employer-sponsored plans like a 401(k) early in your career can be a great way to build toward your retirement, particularly if your employer matches a portion of your contributions.

Build Credit Responsibly

Credit and borrowing will play an important role in helping you reach your goals when used responsibly.

Using a credit card for some of your regular expenses like gas and groceries can be a good way to build up your credit payment history, which is just one factor in your credit score. Other ways to help build your credit score include keeping your debt-to-credit ratio below 30% and avoiding opening too many new lines of credit in a short period of time.

With technology continuing to make it easier than ever to make a purchase with a tap, click or swipe, it is important to monitor your various accounts carefully and try to pay your balances in full whenever possible to avoid accruing interest.

Many recent graduates also have student loans that they will need to repay, so it is important to factor those payments into your plan and keep them in mind when deciding if the purchase you had your eye on is really a need or just a want.

Graduation is an exciting time in your life! With the proper planning, you can set yourself up for success as you move into this new and exciting phase of your life. If you feel you need more assistance, consider speaking with your local banker to help craft a plan.