Facing and managing debt after college can be sudden and overwhelming, especially as student debt has been on the rise. One day you’re walking across the stage to claim your diploma—feeling like a million bucks—and the next you’re the new young adult on the block, trying to figure it all out. It’s like being a freshman all over again.
And every year, it gets more expensive. College tuition and fees have risen more than four times as fast as the Consumer Price Index—which averages the cost of things like transportation, food, and medical care—since the late 1970s. At the same time, college graduates with full-time jobs are making less money than those before them, knocking off about $1,000 of income every year on average in the past decade.
Knowing how to manage your money as a recent college graduate is more important than ever. The sooner you wrangle your finances, the sooner you can focus on more important things, like living your life! Here’s a post-graduation checklist to get a hold of your finances, stat.
1. Create a student loan repayment plan.
Make sure you know about all of your student loans: how many you have, how to pay them, when and what amounts you need to pay, and the interest rates on each. Your college’s financial aid office and any private loan cosigner (likely a parent or relative) should be able to help you get all of this information. Once you’re in the know, you can set up a system to make paying your loans easy.
- Make sure you’re setting aside enough money every month for monthly minimum payments (or more, if you can!).
- If you have a steady income, you can set up automatic payments. Try setting your payments in advance of their actual payment due date, just in case something goes wrong with the payment or your bank account.
- Mark your calendar as a reminder to pay each month, even if you have automatic payments set up. Since I have three logins where I pay my loans, I have three payment-due dates, and set three calendar reminders in advance of the due dates. Use these reminders to send in manual payments, and to check if your automatic payments go through.
For more advice on paying off your student loans, check out this post about how to pay off your student loans fast.
2. Set a monthly budget.
For many recent graduates, the day after graduation marks the beginning of financial independence. If you paid your own way through school, you probably already have a budget for your monthly expenses. But if this is the first time you’ll be responsible for all of your own expenses, you might be new to budgeting.
Either way, anytime you make a big life change, you’ll want to revisit your budget. Your spending categories from college might grow or be replaced by new expenses. Room and board may be replaced with rent. Textbook costs might be replaced with some new professional attire. You might have utility bills and other expenses that you didn’t have to worry about when you were living on campus. Maybe your parents decide that this is the right time to kick you off of their phone bill. All of these changes will need to be accounted for in your new budget.
Another big change? Your income! If you’re working a full-time job after college, you’ll probably start seeing bigger paychecks than you’ve ever had in your bank account. You’ll want to create a budget that takes all of this into account: Your student loan debt, monthly income, and your living expenses–plus any savings goals you have!
Check out this guide to setting up your budget to account for all of these changes and start your adult life on firm ground.
3. Build up some emergency savings.
Another element of your newfound financial independence: When life gives you lemons, it’ll be up to you to make lemonade. Paying down loans or saving for retirement won’t matter if you’re in a bind, need money, and don’t have it.
Start with an account buffer (one to two weeks of your income) and gradually work your way up to an emergency fund (three to six months’ living expenses). Once you’re paying the minimum on your student loans and have a solid account buffer, you can think about bigger goals.
Learn more about emergency savings in our Ultimate Emergency Fund Guide!
4. Start saving for retirement.
We know, we know. You literally just graduated - retirement is so far away! But the earlier you start saving for retirement, the easier it’ll be to save throughout your lifetime. Here’s an overview of all your options when it comes to saving for retirement.
5. Start saving for other goals.
You have a solid debt repayment plan, a plan to build up your emergency savings, a budget to help you stay on track, and even a retirement account. So far, so good!
Now, it’s time to think about the things you want to do with your money. These can be short-term, like a new rug or sofa for your apartment, or longer-term, like a home of your own!
Whatever your goals are, the sooner you can define them, the sooner you can start saving toward them!
Use this guide to prioritizing your savings goals to figure out what to start saving for first.
6. Bask in the extra-loan-payments glory
Whenever you can, try to make extra payments on your student loan debt. Higher payments now will save you money down the road. If you can pay more than the monthly minimum payments, you can pay with either the avalanche method (paying extra toward your highest-interest loans first, and paying less in the long run) or the snowball method (paying off the lowest-amount loans first, and paying more over time).
Go forth and do great things!
College prepares you for a lot of things, but money management is usually not one of them. But that doesn’t mean you can’t start your financial life with confidence. Go through this checklist to set up a strong foundation with your personal finances! Follow us on social media to keep your financial wellness top of mind as you embark on your new adult life.
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