Congratulations graduate! You’ve made it through college but what comes next? The end of college finally marks the moment you enter the “real world” and start working towards financial independence. Unfortunately, if you were like my alma mater, college did very little to prepare you for this next phase of your life. As you trade in your books and embark on the next phase, here are six tips that can help you on your way.
1. Build Your Career
Now is the time to start developing your career and building your professional persona. It’s time to get rid of firstname.lastname@example.org as your email address and replacing it with an address as close to your real name as possible. The next step is to scrub and sanitize your social media accounts like Facebook and Twitter. Employers may not admit it but they check those to see if you’d be a good fit at their company. You don’t want a picture of a beer bong derailing your job prospects. Finally, this is also a good time to network, making contacts at your first job and plugging in to your school’s alumni network.
2. Move In with Mom and Dad (If You Have To!)
If you are having a hard time finding a job, or if you are in rough shape financially, it might be worth it to move back with mom and dad. Don’t take advantage of them – use this as an opportunity to pay down debt, save up for the future, and get your finances in order. And, be good to your parents. Help out around the house. It’s the least you can do in return for their support.
3. Make a Financial Plan
Now is a great time to make a realistic financial plan, one that includes a hard look at your budget. Review your income, your obligations, and try to build a system that forces you to live within your means. By building a plan from the start, you set yourself in the right path. Plan to save up for future goals, as well as for immediate expenses. Think about what you want out of life, and then create a financial plan that can help you reach your goals.
4. Open a Retirement Account
The biggest secret to retiring happy is saving money as early as possible. The earlier you start saving, the longer you have for it to grow and the bigger it’ll be. If you don’t have the option to open a 401k through your work, consider an IRA (either Traditional or Roth IRA). Anyone with earned income can open and contribute to an IRA. Get started by setting aside a portion of your income each month. Even as little as three to five years can make a huge difference in what you end up with.
5. Pay Off Your Debt ASAP
Debt of any kind, whether it’s credit card debt or student loan debt, weighs on you like an anchor. Paying off debt isn’t nearly as fun as accumulating it, but if you don’t pay it off as quickly as possible, you will waste hundreds – even thousands – of dollars paying interest straight into someone else’s pocket. Part of your financial plan should be to pay off your credit cards quickly, and then get a jump on paying down your student loans. The sooner you are debt free, the sooner you can use your own money for you.
6. Start Building a Good Credit History
Your credit history is becoming a bigger and bigger part of your life, financial and otherwise. While you should be eradicating your credit card debt, keep the cards themselves because they are valuable tools in building a good credit score. Credit cards don’t have to be evil. You can use them responsibly (only buy what you can afford, pay off your balance each month, don’t miss payments) to help make other things, like loans, cheaper.
With some thought, and a dose of reality, it is possible for you to get started on the right financial foot when you leave college.