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Tips to Get Ahead After Graduation

After years of working hard and looking forward to completing your schooling, obtaining that college degree or post secondary certfication and entering the career field, graduation has nearly arrived. You’ve no doubt spent many evenings contemplating life on your own, but how much preparation have you done to prepare yourself for the financial responsibilities of that life?

Financial planning is all about security: building your savings and improving your fiscal flexibility so you’re not living paycheck to paycheck. Here is some expert advice for tackling that debt and taking the first steps toward long-term success.

Create a budget

A strong, clear game plan is key to success. For your finances, this involves an aggressive, strict budget. Kerry Hannon, contributor to Forbes, recommends figuring out your monthly take-home pay (post-taxes) and subtracting essentials like utilities, food, transportation, loan payments and rent. Much of the remaining money should be put into savings, with only a small amount left for recreation. Make sure every dollar is accounted for; stick to that monthly allotment religiously.

Plan for retirement

When talking with Fox Business, Lance Roberts, chief strategist at STA Wealth Management, stressed the importance of living off of 70% of your salary and storing the remaining 30% into your savings, spread between a bank account and 401(k)/IRA plan—especially if your employer offers a matching program.

Establish an emergency fund

Set aside around 10% of your income for six months to establish an emergency fund in case any unexpected expenses arise—which, you will soon find out, do.  You can start small with a 52-Week Money Challenge (in a year’s time you’ll have socked away $1,378) or be more aggressive and start out with a lump sum and build from there.  A good goal is three to six months of net pay.

Reduce your spending

Now that you’re in charge of your own spending, find ways to reduce your expenses so you can allot more money to savings and debt repayment. Forbes’ Kerry Hannon recommends shopping at thrift shops and close-out stores for your clothes and furnishings. Additionally, cut back on eating out, opting for shopping at discount grocers and wholesalers to make your own meals. Pack your daily lunch.

Hannon also recommends finding a way to save on rent payments, even if that means living with your family for a year or two. If you have to rent your own residence, split the cost with a roommate you trust; avoid moving into an apartment that charges high rent for unnecessary luxuries. How often are you really going to use that pool?

Shopping and weekend getaways are a great way to recharge from the work week but can eat away at your budget. Do your research and comparison shop before major purchases.

Don’t cut every corner, though. Kathryn Buschman Vasel of Fox Business recommends still paying for health insurance and adding to a 401k, but rethinking expenses like renter’s insurance, particularly if you do not own many valuables or aren’t living in a high-crime area.

Improve your credit

If you want to strengthen your long-term financial success by taking initial steps now, it’s crucial that you earn a good credit score. Buschman Vasel reports that it is important to establish your own line of credit and open a bank account in your name, looking for an option that involves no fees and offers reasonable crisis protection. Make it a habit to pay your bills on time and in full every month. 

Don’t neglect student loan debt

On that note, it is important to point out the potential long-term harm student loan can do to your finances—and how easy it is to defer payment on them right now.

Instead of sliding by on the minimum payments, Ken Ilgunas, author of “Walden on Wheels: On the Open Road from Debt to Freedom,” advocates for tackling debt repayment aggressively. The quicker the debt is eliminated, the less interest you’ll pay in the long run and the quicker you’ll be to financial freedom.  Even paying a bit above the minimum each month will make a difference in the long run.

If you find yourself struggling to scrape together enough money to repay those loans or save money for an emergency fund, Tanisha A. Sykes of USA Today urges you to find a small side job that will put some extra cash in your pocket that can be used to build your savings.

Tight spending habits and aggressive loan repayments might be unpleasant now, but wise financial habits will send you on a post-graduation road with clear skies ahead.  If you need someone to help guide you to financial success, talk with a Kleberg Bank professional today. LEARN MORE