five Must-Know Money Tips for New Grads

Source:   —  April 22, 2016, at 10:45 PM

Recollect this advice, and your post-college life will be a lot easier.

five Must-Know Money Tips for New Grads

If you've a son or daughter graduating from college this spring, or if you're the son or daughter in question reading this, it may have occurred to you that figuring out how to pay for college was the simple part. Your genuine financial education is about to start: that is, how to best manage the money you're going to make.

U. S. News tapped financial experts to compile these money management tips that arguably all new graduates should learn.

That first job: It isn't only about your salary. When you're looking for your first post-college work and hoping it helps advance your career, recollect to think beyond the numbers on the paycheck, advises Kristen Robinson, a Boston-based senior vice president at Loyalty Investments whose specialty is helping women and young investors.

"While it may seem natural to focus on just the salary, recollect there'south more to assess when thinking about a job'south total financial compensation," Robinson says, adding that you should see at whether you're getting medical and retirement savings benefits that might create a disagreement to your bottom line if the real money you're getting every week seems paltry.

She cites a Loyalty Investment study finding that seventy-six % of millennials relocate for a new job. "Cost of living and taxes should be top of mind when evaluating a job, as they can vary dramatically across the country," she says.

In other words, you could be fooled into thinking you've a overweight salary or finish up turning down a well-compensated work if you haven't factored in the benefits, cost of living or taxes.

Start saving for retirement immediately. You may determine it'south not feasible to appreciate the retirement benefits your company is offering if you suspect you won't be there long. But if the proposal is there, get advantage of it anyway, says Lucas Casarez, a wealth advisor at Keystone Financial Services in Loveland, Colorado.

"I worked full time while attending college," says Casarez, who graduated from CO State Univ in two thousand-fourteenth but has worked in banks and credit unions since two thousand five. "One of the mistakes I made in the first few years on the work was thinking that my employment as a bank teller was temporary, and it didn't create sense to get advantage of the employee stock purchase map or employer four hundred one(k)."

But if Casarez could redo his decisions, he'd have started in both programs as soon as his employer allowed.

"Many college grads connect the workforce at an entry-level position," he says. "If this describes you, you may be tempted to delay participation in the employer-provided programs, but it definitely doesn't damage to start ASAP. Even if you don't become fully vested in the retirement plan, all of your contributions are yours to hold and may be rolled over to a new employer'south map or into an individual retirement account."

Be cautious about accruing credit card debt. Yes, you've heard that before, particularly growing up in the recession. Yet it'south so simple to forget when you're on your own, eating ramen noodles and sitting in a lawn chair in your studio apartment. But when you hear your inner voice urging you to splurge on some new furniture, instead hear to Paul Kuzmickas, a bankruptcy attorney in Cleveland, Ohio.

Many of his clients are recent college graduates who don't think about the long-term consequences of having too much credit card debt.

"Credit card purchases I frequently look comprise the latest smartphones, expensive laptops or paying for vacations without realizing how quickly credit card debt and the resulting interest can add up," Kuzmickas says.

None of this means you shouldn't utilize a credit card. "Some debt can be beneficial," Kuzmickas says, referring to how a solid credit history will someday authorize you to obtain a low-interest loan for something love a car or house.

But pay off your debts quickly, he urges. On that note, Casarez recommends that anyone with a credit card balance see at their statement for a portion that says YTD interest charge. (YTD stands for year to date.)

"That's how much extra you ended up paying for the funds you borrowed to create your purchase," Casarez says. "Typically, looking back at the interest charges, you realize that the purchase ended up not being worth it. Personally, when I first looked at that portion of the statement, it changed everything. I could very easily think of other things I'd have liked to spend my hard-earned money on than interest to a credit card company."

Rescue money. Here's how. OK, everyone knows that it'south necessary to rescue money. But if you're wondering how, the moment you've a job, when you're setting up your direct deposit, "automatically split your payroll deposit between your checking account and a savings account or two," says Arlynn Peavey, a certified public accountant in Fremont, California.

She gave that advice to her two college-age sons. She recommends that if you can funnel some of your paycheck into two savings accounts, utilize the first as a common savings and the second for emergencies or your vacation fund.

"Even $10 or $15 per pay period will add up," she says. "The money will be there when needed and you won't miss it or spend it, because the quantity will be processed automatically."

Create a budget. This is probably the most necessary advice you can take, and probably the easiest neglect if you don't obtain into the custom of not just creating a budget, but following and continually updating it. After all, you might start off the year spending a certain quantity of money but spending something wildly different by the finish the year, after getting a new cellphone map and joining a gym.

"Yes it'south cliché, but it'south imperative," says Erin Ellis, an accredited financial counselor at Philadelphia Federal Credit Union. "For many college grads, this can be the first time they're experiencing life with a disposable income. Don't let that toss you off course."

Ellis says that if you don't create a budget, "paychecks tend to arrive and go," and that, of course, can be a problem if your money runs out before the following direct deposit.

"Many assume that budgeting means limiting or restricting one'south self," Eillis says. "Rather, creating a budget tells you precisely what you've so that you can spend and rescue with conviction."

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