The financial decisions you make in your first few years of post-grad life have a great impact on your future. Whether a personal finance course was in your curriculum or not, hereโs everything you need to know about personal finance and saving after college:
Tackle your student loan debt: We know youโve heard this one before: Make a plan for paying off your student loans. For new graduates with federal student loans, you typically have nine-month grace period before payments begin. Use this as your chance to get ahead, if youโre able, and start making payments to pay down the principal balance right away. Also, due to the COVID-19 pandemic student loan payment pause, federal student loans wonโt start accruing interest until October 2022.
Consolidate your student loans: If you have a high interest rate on one or more of your loans, consider refinancing and consolidating your separate loans into one loan with a lower interest rate. Yes, this means one single payment to remember! Donโt forget to check if your loan service provider offers an interest rate reduction for enrolling in an auto-pay program.
Build your credit score: As a new grad who is entering the workforce and taking on the next phase of life, youโll need a solid credit score to help get you there. Maybe youโre renting an apartment in a new city or making your first big car purchase โ whatever it may be, a high credit score will get you approved, and at a better rate, too. Aim for a FICO credit score of 700 and above, and know the five factors that determine it. Remember to make those student loan payments on time, because they will have a big influence on your score!
Master your budgeting skills: While a masterโs degree may not be in your plan yet, you can master your budgeting skills in the meantime. Start your budgeting plan by writing down your income and expenses. Your expenses can range from fixed costs like rent and loans to variable costs like food and entertainment. Until you find what works for you, aim to spend 50% of your budget on essentials and bills, 30% on non-essential expenses, and 20% of your paycheck towards savings and investments.
Start your retirement savings: This may seem like itโs something way down road, but itโs never too early to think about retirement (even if youโre just starting your first job). When you accept your first salaried position, make sure you start contributing to whatever retirement plan the company offers. Make sure you take advantage of any company match they offer and contribute the highest percentage of your paycheck you are able to. Youโll thank yourself later!
Live within your means: It may seem like a no-brainer, but the joy of finally having freedom and solid income can catch up. Enjoy life to the fullest, but remember to live within your means. Avoid temptations that can blow away your paycheck and your budget fast. Itโs okay to treat yourself, but do so responsibly.
In your first few months and even years after graduating college, navigating your new financial responsibilities solo can be daunting. Youโre not afraid to put in the work though โ ask questions, do your research, and make educated decisions. For help with financing your next โHere We Growโ moment, visit penncommunitybank.com.
