Six Financial Tips for New College Graduates
Recent college graduates should develop a financial plan to ensure they’re setting themselves up for a financially successful future, says Senior CFP Board Ambassador Jill Schlesinger, CFP®
With graduation season ending, new graduates will find themselves managing their finances on their own for the very first time. Senior CFP Board Ambassador Jill Schlesinger, CFP®, said now is the best time for grads to get ahead of their finances by creating a plan that will evolve with them.
The earlier young people create a system to manage finances, the better off they’ll be in the future, Schlesinger says. Since many may not know where to start, she shares what can be done now to keep your finances in check as you enter the ‘real world’:
- Create a cash flow: Are you keeping track of money that’s coming in and going out? This will help ensure you are able to fund your various financial priorities. Check out your bank’s app – many offer a tool to help track your spending.
- Build a balance sheet: Do you know what you own (assets) and what you owe (liabilities)? Assets minus liabilities equal your net worth, which for many 21-year-olds, starts with a minus sign. Don’t worry – time is on your side.
- Check your credit report: Get in the habit of checking this regularly to catch potential mistakes and stay in good credit standing.
- Pay down debt: Your first priority should be paying off the highest interest loans (usually credit card and autos). If you’re saddled with student loan debt, make sure you understand exactly what you owe and make sure you’re able to make your monthly payments.
- Establish an emergency reserve fund: Begin setting asides funds in a safe, liquid account until you have six to 12 months of expenses saved.
- Maximize retirement contributions: Try to contribute at least up to your employer’s match level (usually 5-6 percent) in your employer sponsored plan – you’ll thank yourself in the future.
Read Schlesinger’s full blog post here with more details here.
For additional guidance, a CERTIFIED FINANCIAL PLANNER™ professional can work with you to map out an easy-to-follow strategy reflective of your current financial situation to set you up for financial success.
Certified Financial Planner Board of Standards, Inc. is the professional body for personal financial planners in the U.S. CFP Board sets standards for financial planning and administers the prestigious CFP® certification – one of the most respected certifications in financial services – so that the public has access to and benefits from competent and ethical financial planning. CFP Board, along with its Center for Financial Planning, is committed to increasing the public’s awareness of CFP® certification and access to a diverse, ethical and competent financial planning workforce. Widely recognized by firms and consumer groups as the standard for financial planning, CFP® certification is held by more than 83,000 people in the United States.