Instead of being careless with your money for the next ten years, get a head start by taking charge of your financial future right out of the gate. Take a look at some of the most beneficial money saving tips for college graduates.

1.  Know Your Goals

In order to save money, you need to know what you plan on doing with your money once it starts flooding (hopefully) your bank account. When you graduate college, you may not have the complete direction for your life mapped out – who does?

Although you can’t totally control your future, or who will offer you a job, one thing you can control is the development of your goals.

How much do you actually need to live on? What standard of living are you comfortable with? When should you learn about 401ks and IRAs? Is it ever too early to think about saving for your future? What kind of car do you see yourself driving?

The answers to these questions will undoubtedly direct your future – and they shouldn’t be ignored.

It’s important to establish your long-term and short-term goals so you will be able to maintain order of your finances both now and in the future. Developing a post-college financial plan is one of the best decisions you can make.

2.  Stay In Control of Your Educational Debt

Another great strategy for saving money is to pay down your educational debt as soon as possible. And since many student loans don’t require repayment until after graduation, paying your loan debt is probably a new concept – one that has dire consequences if it’s pushed to the back burner.

Although making the minimum student loan payments is required, paying more than the minimum each month will help those loans vanish quicker. Not everyone will be able to double their monthly student loan payment, but remembering to include your student loan repayment into your post-graduation budget will help you stay in control and help build your credit.

3.  Adjust Your Financial Perspectives

It’s a mental game – the way you think about and approach your finances will go a long way in helping you save the money you earn. While college offers more freedom, most students live in a relatively safe bubble of existence while earning their degrees.

When you’re a student, all of mom and dad’s money seems to get labeled as disposable. You tend not to notice the money that pays for school or books or food; it’s almost as if college has tricked you into thinking money is easy to get and will always be there.

But once you start earning your own income, paying your own bills, and taking care of yourself financially, your financial perspectives should change accordingly. The income you earn should be respected enough to develop wise strategies for managing, saving, spending, and even investing.

4.  Keep Your Spending In Check

One of the most responsible decisions you can make when it comes to your post-college financial landscape is to re-define your wants and needs. When you can eliminate self-deception and honestly separate your needs from your wants, you will take charge of your income and graduate into responsible adulthood.

Without gaining control of your spending, you’ll soon find yourself trapped within debt wondering where you went wrong. Instead of searching for tips in ten years about how to get out of debt, appreciate the benefits of financial responsibility and spend wisely today.

5.  Seek Advice and Learn From Others

The last bit of advice for saving money as you begin your life after college is something you’re already doing if you’re reading this article – don’t be too proud to seek wise financial advice from family, friends, or other respectable outlets.

Research the topics that you don’t understand, get help with the areas that you struggle with, and always be teachable when it comes to your bank account. None of us make the right decisions 100% of the time. But what separates the wise from the unwise is the humility to know when you need help. Never stop learning and never stop saving.

Student Loan

Luckily, most taxpayers who make student loan payments on a qualified student loan will get a little relief. A qualified student loan is a loan you took out solely to pay higher education.

In most cases, the interest portion of your student loan payments during the tax year is tax deductible. Your deduction is limited to interest up to $2,500 or the amount of interest you actually paid whichever is less.  As with most tax credits and deductions, there are limits in place.

You can deduct student loan interest if:

• You paid interest on a qualified student loan in the tax year
• You are legally obligated to pay interest on a qualified student loan
• Your filing status is not married filing separately
• You and your spouse, if filing jointly, cannot be claimed as dependents on someone else’s tax return
• You are a single filer with income under $60,000, however your full tax deduction phases out between $60,000 and $75,000. Income limits are double for joint filers. If your income falls above those limits, it is not deductible at all.

The other good news regarding the student loan interest deduction is that you do not need to itemize deductions in order to claim it. This makes sense considering many recent college graduates are not itemizing deductions.

If you paid more than $600 in interest to a single lender during the year you should receive a 1098-E form showing how much interest you paid for the year. If you made student loan payments but did not receive a 1098-E, you are still entitled to claim the interest deduction, but you may need to call the lender or pull up your records online.

When filing your taxes, don’t forget about this tax deduction and remember that TurboTax will calculate the deduction for you if you are eligible.

Interactive by Column Five

What did you get for graduation? Or what did you buy for your graduate?

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College Savings

1.  Don’t waste money on bank fees. Find a bank or credit union that offers free checking to college students. Be sure your account includes free online banking and debit card transactions. Free checks are nice too, but in today’s electronic age most people don’t write many checks.
2. If you opt for a credit card, get one with no annual fees and the lowest interest rate you can find. Stick to your card limit, pay your credit card bills on time so there are no late charges, and pay more than the minimum so you can minimize interest charges.
3. Reduce food and beverage expenses. Eat in or grab fast food instead of eating out, and when you do eat out order the less expensive items or split something with a friend. Drink good ol’ American beer rather than expensive foreign brews, or gather with your friends for a party with a six-pack at home rather than expensive beer, wine, and set-ups in a restaurant or bar.
4. Buy used textbooks if you can. There are several online textbook comparison sites where you can shop for the best prices. And when you are done with the book, if you don’t need it in your permanent library, sell your used textbooks online.
5. Splurge on a good coffee maker – and use it. Drinking quality coffee at home is much cheaper than buying expensive lattes at your local coffee house. Tuck a thermos full of coffee into your backpack and use it to refill your to-go cup. If you do this stealthily enough, no one will even peg you for a geek.
6. Stock up on snack foods. I know you are pressed for time and need to eat on the go a lot, but crackers, string cheese, cookies, and donuts brought from home are all much cheaper than buying them in coffee shops, and they are just as portable.
7. Skip the bottled water. Get yourself an inexpensive bottle, fill it with tap water, and guess what – you now have bottled water at almost no cost. If the water in your area is crappy, invest in a filter to improve the quality and taste.
8. Look for student discounts. Many retailers and service providers offer student discounts. If you don’t see a discount advertised, ask. The worst they can do is say no, and you may be able to snag a discount that isn’t widely advertised.
9. Buy used if possible. Shop for computers and other electronics at ebay or on Craigslist and you’ll get much more for your money. It may be lightly used, refurbished or last month’s model, but it will still be functional.  And let’s face it, if you bought and used a computer, it would then be a used computer, so why not start there and save some bucks?
10. Free entertainment is, well, free. Watch television through your computer, gather with your friends at free movie screenings on campus, join in a game of touch football or tennis, or go for a swim at the Y. Get creative, get moving, and get involved. There are lots of ways to entertain yourself on the cheap.

Student loan interest deduction requirements

In order to claim your student loan interest as a tax deduction, you must satisfy several requirements. Married persons who file separately cannot claim a deduction for student loan interest. Also, neither you, nor your spouse if applicable, can be claimed as a dependent on another person’s tax return. Finally, the deduction is only available if your modified adjusted gross income is below the annual limit. In 2010 for example, your modified adjusted gross income must be less than $75,000 for a single filer, or less than $150,000 when filing a joint return.

Annual deduction limitations

You can deduct only the student loan interest you pay during the tax year, subject to annual limitations. If you pay at least $600 of interest, you will receive a form 1098-E that reports your total payments. If you pay less than $600, you can still claim the deduction, but you will have to consult your records or contact your lender to find out exactly how much interest you paid. Although the annual deduction limit is subject to change, in 2010 you can deduct up to $2,500 of student loan interest payments.

Eligible student loans

You can only claim the deduction for interest that accrues on student loan funds that you actually use to pay education-related expenses. For example, if during your senior year in college you use $2,000 of your student loan to purchase suits for your new job, the interest that accrues on that $2,000 is never deductible. Additionally, the loan cannot be from a relative or a qualified employer plan. Though you must be the one who is responsible for repaying the loan, you can use the funds to pay the school expenses of your spouse or dependents and still be able to claim the deduction.

Reporting the deduction

To claim the income tax deduction, you cannot file your income taxes on Form 1040EZ. Since the deduction is an adjustment to income, you don’t have to itemize your deductions to claim it. Unlike many other deductions, there are no additional IRS forms to prepare; however, the IRS instructions include a worksheet to help you calculate the right amount.

The good news is that there is more than $100 billion in financial aid available to students and their families to help pay for college.  FAFSA is the application used by the government and nearly all colleges and universities to determine eligibility for federal, state, and college-sponsored financial aid, including grants, educational loans, and work-study programs.

Completing your FAFSA correctly and on time gives you the best chance to get funding. That’s where TurboTax FAFSA comes in.  It is a new, simple online option for families to complete the FAFSA, helping put them one step closer to achieving their dreams of college.

When you use TurboTax to complete your 2009 tax return, TurboTax can automatically transfer up to fifty percent of the required tax information directly onto your FAFSA form for you, saving you time and helping with accuracy.

And the best part, TurboTax FAFSA is completely free.  All you have to do is follow TurboTax’s famous step-by-step guidance to answer all the questions, then print and mail your application to complete the process.

So if you are applying for college in the near future, don’t delay, it’s better to apply early and state deadline vary.  Be sure to put “complete FAFSA” top of your “to-do” list and check out TurboTax FAFSA for help to get started.

Just who qualifies as a middle class these days? The Middle Class Task Force says that the majority of Americans describe themselves as middle class or working class. “Middle class families are defined by their aspirations more than their income,” its report says. Those aspirations include home and auto ownership, retirement security and college education for children.

To help American’s achieve those goals, the Obama administration has come up with several tax proposals. The president addressed these initiatives in his State of the Union address:

Automatic Retirement Savings for Workers

Roughly half of the American workforce—some 78 million workers—does not have a retirement plan at work. The administration would like their employers to automatically enroll employees in a tax-deferred retirement plan, known as a workplace IRA.  (Employees will be able to opt-out of the plans.)

Contributions to these plans will be voluntary for workers. The smallest firms—although the White House didn’t specify how small—would be exempt.

To encourage workers to save in these automatic plans along with other qualified retirement accounts, the Savers Tax Credit will match contributions. The proposal calls for matching 50% of the first $1,000 of retirement contributions by families earning less than $65,000. There’s a partial credit for families earning up to $85,000.

The automatic retirement savings is based on a large body of research in the area of behavioral finance that shows people save more when decisions are made for them. A study from the Employee Benefit Research Institute finds that employers adopting automatic enrollment in their 401(k) retirement plans have also generally increased the “employer match” to participant’s accounts—in some cases, by a significant amount.

Boost Childcare and Dependent Care Tax Credit

There is some additional tax relief for an estimated 38 million Americans who are providing unpaid care to an aging relative. And many of them are part of the sandwich generation—they are also caring for their children while looking after elderly family members. The administration wants to practically double the child and dependent care tax credit for families earning less than $85,000 a year. (Credits will rise from 20% to 35% of qualifying expenses.)

Almost all eligible families making under $115,000 a year could see a larger credit, too. Families could claim up to $3,000 in expenses for one child or $6,000 for two children. The maximum credit for a family with two children making $80,000 a year would increase from $1,200 to $2,100.

Student Loan Relief

Recent college graduates are often saddled with more than $23,000 in debt. In a tough economy with few jobs, they are struggling to pay off their student loans. The administration is calling for a cap of student federal loan payments to 10% of a student’s income (above a basic living allowance).

Here’s how it works: the monthly payment for a single borrower earning $30,000 who owes $20,000 in college loans would be $115 a month – as opposed to $228 a month under the standard 10-year repayment plan, according to the plan. The income cap could cost the government about $1 billion over the next five years, estimates Mark Kantrowitz of Finaid.org.  “This proposal would yield meaningful repayment relief to hundreds of thousands of borrowers whose federal student loan debt exceeds their income,” Kantrowitz says. “It would cut their monthly payments by one-third and forgive the remaining debt sooner.”

You can find more information about the tax proposals from this White House Fact Sheet.