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5 Money Moves to Make Before Graduating College

October 9, 2020

Whether your college graduation is months (or years) away, it’s never too early to start thinking about your financial life after college. In fact, the sooner you begin to understand things like student loans and retirement funds, the better off you’ll be. Managing your personal finances will be just as important as finding a full-time job or applying for graduate school. Here are five money moves that college students should make before graduating from college.

Students graduating college

 

1. Revise your budget

While in college, you may have created a basic budget (hopefully) to fit your income and needs as a student. Soon, you will either be graduating and heading into the workforce where you will earn a steady and increased income, or attending graduate school. These life changes will require you to revisit and revise your existing budget or create a new budget entirely.

When revising or creating a new budget for life after college, make sure to include all new expenses that you may not already be paying for, such as student loan payments, retirement savings, and emergency savings. In addition, account for current expenses that may be increasing soon, such as monthly rent payments or gas costs. In the future, plan to review and revise your budget each year to help you meet your financial goals.

student logging into student loan account

2. Start thinking about your student loans

As a college student, your main focus is most likely your studies and future career goals. Chances are, you aren’t thinking about how much student debt you owe or how paying back your loans will work. Many lenders provide a grace period to students after graduation. This is a certain amount of time, often six months, that students have before they must begin to make regular student loan payments. This offers graduates some time to find a job after college and get their finances in order first.

Before graduating, come up with an actionable plan for how you will tackle student loan debt. Take inventory of how many student loans you have, the amounts owed, and the interest rates. For some, refinancing student loans or qualifying for student loan forgiveness may be options worth considering. For more student loan advice, read 8 Tips to Help You Pay Off Student Loans Fast.

 

3. Focus on building your credit

Once you enter into the “real world” after college, your credit will start playing into effect more and more. For example, if you want to buy a new car, get a mortgage, or take out another type of loan, having some credit established will be necessary. Start to improve your credit score throughout college, so you are prepared for what is ahead.

A common way to begin to build your credit while in college is by applying for a credit card. Keep in mind that without any prior credit history, you may only qualify for a student credit card. These types of credit cards may be exclusive to those planning to enroll or currently enrolled in a college or university and often begin with a low credit limit. If you already have a credit card, you can build your credit by maintaining good habits, such as paying your monthly payment on time, keeping your balance low, and avoiding credit card debt.

student financially planning

4. Anticipate planning for retirement

Graduating means that you need to start thinking about your long-term goals as well as your short-term goals. While it may seem like something you can put off for several years, beginning to save for retirement as early as possible is very important. For a lot of people, retirement will not occur until their 60s or later, but those who start investing early will be able to earn more in interest over the coming decades.

When you graduate college and begin working a full-time job, put a small percentage of each paycheck towards a retirement savings account. Many employers even offer to match the amount you put into your retirement account, so aim to use that benefit to your full advantage, if offered. To start learning retirement account basics, read What 20-Somethings NEED to Know About 401(k) Retirement Plans.

 

5. Keep building your emergency fund

After graduation, having an emergency fund should be seen as an extremely important aspect of your financial goals. An emergency fund is a savings account that you set up specifically for unexpected financial dilemmas or emergencies.For instance, if you lose your job, have a major home or auto repair, are diagnosed with an extreme illness, or fall into any other type of financial crisis, that account may be used. To learn more about planning for these kinds of unplanned and costly events, read How to Plan For Financial Emergencies.

In your emergency fund, you should aim to have three to six months of living expenses saved up. However, if this is unrealistic for your budget, start with what you can. An easy way to start building your emergency fund is by setting yourself a savings goal. Your goal could be to contribute a daily, weekly, or monthly amount into a designated savings account. Contributions can even be made using automated transfers from a checking account. Learn how to start building your emergency fund by saving only $7 a day!

 

 

After graduating college, students will have to focus on new aspects of managing their personal finances. To avoid the stress of having to learn many new financial concepts all at once, do what you can to be informed well before student loan payments are due or you’re in need of money for an unexpected emergency. Build your credit and start saving for retirement sooner rather than later. There’s a good chance you’ll be glad that you did.

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