Leaving the safe walls of the college to enter the real world can be scary as hell.
From having resources on campus in your hands and a scheduled schedule set by your teachers, it can be a tornado that leaves everything behind after graduation. Particularly frightening is what is happening financially. Money management skills are essential for survival, and something most of us did not learn much about during our school days. For example, only seven states require schools to offer a stand-alone finance class, and lawmakers in 25 states and the District of Columbia have just begun to introduce financial education accounts This year.
And let ‘s not forget the exhausting student loan debt that may have accumulated if the high tuition costs are not fully covered by scholarships, financial aid or out-of-pocket payments.
We know that there can be a lot to think about.
That’s why we used the financial expert Ray Reeves to help recent graduates make smart money moves after going through this stage. Reeves is a financial coach and founder City Girl Savings Bankan organization that teaches working women how to achieve financial success.
# 1: Do not wait too long to start paying off the rest of your student loan.
As mentioned, we are in a crisis of trillions of dollars in student loans no real sign that our current government offers broad relief to the millions of borrowers who are drowning in debt.
In response to Biden’s move to cancel $ 415 billion in student loans in January, Bernie Saunders wrote on Twitter: “Well done. Now cancel the remaining $ 1,883,214,046,704 for another 44,984,000 Americans still drowning in student debt.
Reeves said you have to be smart and fast to avoid dying on a student loan … uh … I mean the debt trap.
“If your student loans are deferred for a certain period of time, but you have the opportunity to start paying, then start paying! “Even if you only pay $ 25 a month for your loans, you make your future self easier,” Reaves shared with Essence. “Do not let high balance scare you to think about it later”, balance goes nowhere. The sooner you start paying them, the sooner you will finish with them “.
# 2: Establish good credit building habits now.
As adults, we know that good credit opens doors that cash just won’t do – and with the recent news Wells Fargo allows credit card users You earn points from jobs like paying rent, it seems that financial institutions offer more ways than ever to build good credit. But you have to be smart.
“I had to learn the hard way the value of good credit – zero to low interest rates, ease of borrowing and the choice to get what I needed when I needed it,” Reeves said. “The sooner you can start building a good credit history, the more choices you will make for yourself in the future. Either you buy a new car, or you buy your own apartment (without co-signer), or you buy your own house one day. Not sure where to start? Think a Self Credit Builder Account! You can decide on an amount and a payment term that works best for your budget… and you already know how important a budget is! Then, once you make timely payments each month, you start creating your credit history. Once you pay off your Credit Builder account, that money is all yours to save. ”
# 3: Use a budget and keep track of your expenses.
In college, most of our main expenses are spent on tuition, so it is easy to spend them blindly. However, after you graduate, an accumulation of small expenses can quickly turn into big problems if you are not careful.
“Most of us are not lucky enough to make a lot of money in college,” Reeves said. “According to the National Association of Colleges and Employers, the 2020 alumni class earns an annual salary of $ 55,260. While this number is growing steadily each year, the cost of living in the United States has also risen. It is important for college graduates to start using a budget and keep track of their expenses. Building these positive financial habits now will ensure that you will be able to manage wage increases in the future. Not to mention, the budget is one of the best tools for achieving financial success and happiness! ”
# 4: Start contributing immediately to a 401k or IRA.
Retirement savings seem like a job that should be prioritized years from now, but Reaves said you should push it to the top of your list, especially after getting your first paid job or starting a new one. company.
“Most companies do not start meeting your 401,000 contributions until you have been working for at least a year,” he said. “This does not mean that you can not start contributing to your 401k as soon as you are hired. The sooner you start saving for retirement, the more you will have when it comes time to retire. In fact, a 25-year-old who contributes $ 300 / month by the age of 65 will have over $ 1 million at the time of retirement (assuming a historical growth rate of 8%). If you start contributing earlier, you will get more! “If you do not have the ability to contribute to a 401k, then the IRA is a great second choice!”