Financial Planning After College
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Congratulations on finishing college and entering the workforce! Life after school is exciting. But it can also be overwhelming.
There’s so much to do to establish your adult life after college. So, where do you start?
Don’t worry; we’re here for you with some practical advice to begin your post-grad years.
Let's take a look at 9+ money-related things to do after earning a college degree and starting your new career. You’ll be “adulting” in no time.
9 Steps to Starting Your Financial Journey Post-Graduation
1. Learn Financial Terms
Now that you’re an adult and on your own, it’s time to brush up on financial terms and explore money topics you’ll need to know to manage your finances in life after school.
Here is a glossary of personal finance terms to get you started.
A few key terms that matter most as you set up your financial life after college include 401(k) plan, beneficiary, compound interest, emergency fund, financial house, health savings account (HSA), net worth, vesting period.
Remember, college may be over, but learning never ends!
2. Navigate Your New Hire Paperwork
Congratulations! You’re now employed. On your first day, the onboarding process entails more than just meeting your team to embark on your career.
Haven’t landed a new job yet? Ace Your Job Interview and Get Your Target Salary
You’ll need to fill out a lot of paperwork before settling into your new role.
Here are the key things to look out for:
- Retirement plan – Look into the options your employer provides.
- Do they contribute or match your contribution to your 401(k)after a while?
- How much can you afford to contribute from each paycheck?
Investing at a young age means your money has time to work for you. Someone who starts investing at 22 can invest less per month than someone who’s just starting to invest at age 42. Invest early and invest often is a saying you’ll appreciate a lot more as you watch your account balances grow!
- Health insurance – This is usually something you have a few days to look over before you enroll.
- How much is the deductible?
- How much does the company contribute, and how much money would come out of each paycheck?
- Are you also eligible for a medical savings account?
Take the time, compare the plans offered, and look back on the last couple of years. Did you go to the doctor or hospital for more than routine annual exams? Take all of that into consideration.
- Other benefits – Depending on the company, they may include other employee benefits like gym memberships or employee discounts at certain places as part of your compensation plan. Spend time getting to know all the offerings, and contact your HR rep if you have any questions.
3. Choose A Bank
At most banks, college student accounts expire when you hit a certain age or 4 – 5 years after you're finished with school. Evaluate what type of bank you’d like to do business with.
Each type of banking institution will have different pros and cons. Pros like having ATMs all over the country or an extensive customer service department for quick answers and cons like account fees and minimum balances.
Choose what’s best for you!
National Banks – these banks are the “big name” ones you’ll recognize instantly. They’re travel-friendly since they have branches and ATMs all over the United States.
Credit Unions/Community Banks– these are smaller institutions if you plan to stay local to one area. Credits unions often offer a more personalized customer service experience and usually have higher savings rates and lower loan rates.
Online-only Banks – these are becoming more and more popular. They offer the best technology, lower fees, and higher savings rates. Make sure any online bank you choose is FDIC covered.
Ally Bank, CapitalOne 360, Chime, and CIT Bank are just a few reputable banks online.
4. Open Your Financial Accounts
Now that you’ve picked a bank, what accounts do you need to open? Below are the basics that we recommend you start with. You can always add more accounts as needed.
Checking– First and foremost, you need a checking account. This is where your day-to-day spending will happen.
You can get a debit card to make purchases and order paper checks for this account. Remember, the money will be deducted automatically from your account balance.
Checks may seem like an outdated notion, but it’s always good to have at least one book of checks available.
Some landlords will only accept checks, and sometimes you still need them to set up direct deposit. Grab a book (they never expire) and keep them somewhere safe.
Savings– a savings account is just as it sounds. It's where you'll save money for large purchases, like a house, or to cover emergencies, like a sick pet.
You can use this account for overdraft protection for your checking account with most banks as well.
Credit Card – Now’s the perfect time to master the proper use of a credit card to build your credit score.
Get a card with a smaller credit line, use it to make regular purchases, and then be sure to pay it off in full each month.
It can also help you cover emergencies in a pinch when your savings account balance is low. Make sure to know what fees (if any) are involved and the interest rate.
Roth IRA – We told you starting to invest early is good, right? We strongly suggest opening a Roth IRA if you don’t have an employer-sponsored retirement savings plan. It can also be a great idea even if you have a company 401(k). Read more about IRAs.
5. Set up a Budget
You’ve picked a bank and opened your accounts. Now, what do you do with the money you're earning? Set up a budget!
Start by listing everything you have to pay for monthly, then quarterly, then annually. For more detailed guidance, read how to start a spending plan.
- Budgeting can be hard! If you're having doubts about how it could help or are worried it won’t work, learn how to avoid common budgeting mistakes.
- Make a plan to pay off your student loans. You have an education; now you have to pay for it. Make sure you know your repayment terms and interest rates.
- Automate. Put as many bills as you can on autopay, which means the payment is deducted automatically from your account.
- Optimize your expenses to allow you to save more money.
- Make a habit of contributing to your savings – automating the savings process can help you build up an emergency fund.
- Get mobile! Some of the best budgeting tools are listed below. Check them all out and choose what works for YOU!
- YNAB (You Need A Budget)
Related Reading: How Can Personality Types Affect Your Finances?
6. Figure Out Housing
Where are you going to live?
- Are you leaving your college town to move back in with the parents for a bit? This is a great time to start saving!
- Renting a place? Will you move into your own apartment or move in with a roommate or two (or three…) to help share expenses? Make sure you do a little vetting, have interviews, and ask for references when looking at roommates!
7. Obtain Transportation
Your transportation needs will vary depending on where you live and what fits into your budget.
- Public transportation-if you live in a city or an area with excellent public transportation, then that’s going to be the most economical and environmentally friendly option. Keep in mind how much walking you’ll be doing from the station/stop to home or work. While a 10-minute walk is lovely in the spring and summer, you may find yourself taking a cab when it is cold or snowing. Make sure to factor in those costs!
- Car-if you live/work in a suburban or rural area, then buying or leasing a car might be best. Here are some things to look out for if you are thinking about purchasing a new vehicle and what to know if you’re considering leasing a car.
8. Start a Financial Plan
Spend time doing some short and long-term financial planning.
In addition to saving an emergency fund in the short-term and establishing retirement accounts for the long-term, you'll have lots of incremental goals in between, such as:
- Attending graduate school
- Paying for a wedding
- Buying a home
- Traveling extensively
- Investing in real estate
- Following a passion or starting a business
- Becoming financially independent
Create a financial mission statement, set specific, attainable goals, and consider establishing sinking funds to help you stay organized and on track.
9. Start your Estate Planning
Yes, seriously. No one likes to talk about death or dying, but it’s necessary. Even if you’re young and healthy, this is a necessity.
Below are the documents you should have set up. But if you want to start with the basics, a living will and a power of attorney are the two most important.
Find additional estate planning information here.
- Living Will/aka Advanced Care Directive – this document details your desires/wishes regarding your medical treatment in case you're unable to express them during a medical emergency.
- Power of Attorney – gives someone you trust the authority to act on your behalf regarding legal and financial matters while you are alive. Power of Attorney expires once you pass away.
- Will – states how you wish your property to be distributed after death. States which person (known as the executor) is to manage the property until it is distributed. Consider having a will if you own any family heirlooms or anything of value that those close to you may fight over after you are gone. For example, if you have your grandmother’s necklace and you’d like your youngest sister to have it, then this is something that you would want in a will. Even though your siblings may know your wishes, there would be no way to enforce them without a will.
- Life Insurance – is money paid out in the event of your death. This is especially important if your parents co-signed your college loans with you. In the event of your death, your parents may become responsible for paying those loans. A life insurance policy would help them cover that obligation.
Graduating from college and starting your adult life can be scary. But with tackling these 9 items, you’ll be off to a fantastic start.
- Bonus reading: How to Start a New Job Successfully
When you need additional financial information or life after college advice, reach out to a trusted friend or family member who's where you aspire to be.
You can also consult a financial advisor or search Women Who Money for information to help you meet your money goals. Continuing learning new skills to grow your career and build a strong financial house.
Article by guest contributor Jessica Strull, a freelance writer who works with leaders looking to drive employee engagement and increase customer satisfaction. Jessica holds a bachelor’s degree in Human Resource Management. When she’s not writing, you can find her binging bad movies, reading great books, or hanging out at Walt Disney World. Find Jessica on jessicastrullwrites.com.