Whether your college graduation is right around the corner or still a few years away, it’s never too early to start building your financial foundation. In fact, the sooner you get a handle on things like student loans, saving, and budgeting, the smoother your transition to life after college will be. Managing your personal finances will be just as important as landing a job or getting into grad school. Here are eight smart money moves that college students should make before graduating from college.
1. Revise your budget
While in college, you may have created a basic budget to fit your income and needs as a student. Soon, you will be graduating and heading into the workforce or attending graduate school. These life changes will require you to revisit your financial situation and potentially create a new budget altogether.
As you update your budget, make sure to include any expenses that you may not already be paying for, such as student loan payments, retirement savings, and contributions to an emergency fund. Also, consider how current costs like rent, transportation, or groceries might increase. Moving forward, try to review and adjust your young adult budget each year to stay on track with your financial goals.
2. Think about a student loan repayment plan
As a student, you’re probably focused on your studies and future career goals, but it’s also important to start thinking about your student loans. Many lenders provide a grace period after you graduate (usually around six months) before you have to start making payments. This gives you a decent amount of time to find a job after college and get settled financially.
Before you graduate, make a plan for how you will tackle student loan debt. Start by figuring out how many loans you have, how much you owe, and what the interest rates are. If you have multiple loans, look into options like refinancing or student loan forgiveness to see if they could help you manage repayment. The more you understand now, the more confident you’ll feel later.
3. Focus on building your credit
After you leave campus with your degree, your credit score will matter a lot more. Whether you’re trying to rent an apartment, buy a car, or take out a loan, having good credit can make a big difference. That’s why it’s smart to start building credit now, while you’re still in school.
One of the easiest ways to build your credit while in college is by applying for a credit card. If you already have a credit card, you can build your credit by maintaining good habits, such as paying your monthly payment by the due date, keeping your balance low, and avoiding credit card debt. Using credit responsibly in college can set you up for success afterwards.
4. Anticipate planning for retirement
Retirement may seem like it’s a long way off, but the earlier you start saving for retirement, the better. Even though most people don’t retire until their 60s or later, starting early gives your money more time to grow through interest and investments.
When you start working your first full-time job post grad, try to put a small percentage of each paycheck into a retirement account, like a Roth IRA. If your employer offers a 401(k) with matching contributions, take full advantage, as it’s basically free money for your future. Starting now can make a big difference in your long-term goal later.
5. Keep building your emergency fund
Having an emergency fund during college is an important part of your financial plan. An emergency fund is money set aside specifically for unexpected situations. For instance, if you lose your job, have a major home or auto repair, or are diagnosed with an extreme illness, that account may be used. If you don't plan for these kinds of unexpected expenses, these surprises can seriously throw off your budget.
Ideally, you should aim to have three to six months of living expenses in your fund. However, if this feels out of reach right now, start with what you can. Set a savings goal and add money regularly, whether it’s daily, weekly, or monthly. A high-yield savings account is a great place to keep your emergency fund, and setting up automatic transfers from your checking account can make saving even easier.
6. Begin looking for jobs
After graduation, most students need to start earning money to support themselves. Since the job search can take time, it’s smart to start looking a few months before you graduate. Consider using campus resources, like your career center to polish your resume and practice interviews, while you still have access to them.
It’s great if you can land a job in your major, but it’s also okay if your first job isn’t your dream one. What matters is getting started and building experience. Just make sure you’re balancing your job search with your schoolwork, as graduating is still the top priority. Try to apply early, and if possible, have some savings ready in case there’s a gap between finishing school and starting a job.
7. Find an affordable place to live
Wherever you move after college, do your best to find a place that works well with your budget. You can’t always control how expensive a city is, but you can control your living situation. Even if you were hoping to leave roommates behind after college, living with others (or even moving back in with family) can be a smart move.
It might not be your dream setup, but sharing a space is a great way to save money. Since rent is often one of the biggest expenses, cutting costs by living with friends or family can give you more breathing room as you start your career.
8. Leverage student discounts
Many retailers know that both high school and university students are working with tight budgets. That’s why tons of places – including restaurants, clothing stores, online shops, subscription services, and more – offer student discounts. However, many of these deals end as soon as you move your tassel from the right side to the left.
Before you leave your student status behind, take advantage of as many discounts as you can. Get a percentage off tech and school supplies, book travel at lower rates, renew subscriptions as student prices, and save on everyday items from your favorite brands. A little effort now can save you a lot of money.
After college, your financial responsibilities will start to shift. You’ll be dealing with managing your income, loan payments, and financial emergencies – sometimes all at once. That’s why it’s smart to start learning and preparing while you’re still in school. The more you get ready now, the less stressful “real-life” money stuff will feel after you graduate.
