Managing Your Money After Graduation

Managing Your Money After Graduation

Graduating can have many next steps – Planning for more schooling, starting a new job, or maybe a year of exploring. No matter what you plan to do, this is the perfect time to begin laying the groundwork for your financial future.

What Accounts Do You Need?
The easiest way to set up your money flow is to set up a system of accounts right from the beginning.

Checking Accounts:
For Regular Expenses. These may vary daily to monthly, and usually the place where your work money is also deposited.

Savings Account: 
For Longer Term Expenses. These can include vacations, big purchases and more. 
For a Rainy-day Fund: To accrue more interest than a checking account.

Credit Card:
To Build Credit History: Which most people will need to establish financial credibility.
For Everyday Transactions: From groceries to clothing and more, the balance should be paid monthly from a checking account. Just be careful not to spend more than you can afford.

Starting a New Job

Set up direct deposit: Direct depositing your paycheck has many advantages, but the biggest one is that the money will automatically be in your account. It is safe and easy to set up. Most companies include this in their new hire paperwork and we highly recommend activating this perk.

Maximize your benefits

Medical: The Affordable Care Act allows individuals up to 26 to stay on parent’s health care, so if that still applies to you, consider shifting this money into savings for now.

401k: It’s never too early to start saving for retirement, especially if your new employer does employee matching. Set this up from the beginning and it will just be an automatic deduction from your paycheck that you will appreciate when you are older.

Plan Your Budget

Any life change is a great opportunity to take a moment and reevaluate your budget. A good equation for your take home pay when just starting out is:

30% housing & utilities
15% food
10% personal expenses
15% transportation (including car loan or commuting expense)
10% clothing & entertainment
20% debt repayment & savings

Paying Off Student Debt
No place in the U.S. is immune from student loan debt.

State: District of Columbia
Rank: 1
% of Residents: 17.2%
Average Debt: $54,945

State: Maryland
Rank: 2
% of Residents: 13.6%
Average Debt: $42,861

State: Georgia
Rank: 3
% of Residents: 15.4%
Average Debt: $41,639

State: Virginia
Rank: 4
% of Residents: 12.5%
Average Debt: $39,165

State: Florida
Rank: 5
% of Residents: 12.2%
Average Debt: $38,459

State: South Carolina
Rank: 6
% of Residents: 14.3%
Average Debt: $38,414

State: Illinois
Rank: 7
% of Residents: 12.7%
Average Debt: $37,757

State: North Carolina
Rank: 8
% of Residents: 12.5%
Average Debt: $37,721

State: New York
Rank: 9
% of Residents: 12.2%
Average Debt: $37,678

State: Delaware
Rank: 10
% of Residents: 12.9%
Average Debt: $37,559

Things you can do immediately after graduation to start paying off student loans:

Don’t use the grace period unless you need it. If you are moving right into work, then allocate money for your student loans right away, even if you are eligible for a grace period. It will save you money in interest down the line.

Deduct your student loans from your taxes. Usually, the year after graduation is the first time you may be filing for your own taxes. Partner with a tax preparer or use software to identify all of the places where you can save money. Student Loan Interest Deduction is a big place to add an important exclusion to your return.

See if your employer will help. Employer-paid student loan repayment assistance is gaining in popularity, especially among larger corporation. It can’t hurt to ask if your company offers these services, especially as you are in the onboarding process.

Remember, You Are Not Alone

Millennials and Gen Z – the NOW generation – have stated their biggest concerns in life after college are:

• Finding a job
• Paying off their education
• Obtaining personal and financial health
• Paying for a place to live on their own

We are Here to Help

Contact us for assistance wherever you are on your post-graduation life.

Sources:
The Institute for College Access and Success, Adecco.com, Educationdata.org

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