Money management is more important than ever for recent college graduates, who face an average of $37,172 in student loan debt. Unfortunately, some students may not receive the financial education in college that they need to succeed in the real world. We have five quick tips to get young people on the right track to financial wellness after higher education.
Set a Budget
When you reach financial freedom, the very first step everyone should take is to create a budget. Even students who return home after graduation will have expenses to pay, from student loans to food and transportation. If you want to have money left over for entertainment, it’s essential to not let impulse purchases get the best of you. Account for the basics: rent, utilities, gas, credit cards etc. to figure out your discretionary income.
Don’t Let Debt Take Over
After four or more years of college education, unpaid credit card bills should not be the demise of the dreams you’ve worked so hard to achieve. Some employers will check an applicant’s credit history and, if you have a poor score, you could miss out on a job. Work with a financial consultant to make a clear plan of action to pay off your student debt, credit cards and other loans, so you can continue to pursue your goals.
Start Investing Now
It may seem impossible, but the earlier you start investing in the stock market, the better. Many employers make it easy to invest, offering a retirement fund to employees and matching their contributions up to a certain percentage. You’ll likely have a representative at the investment company your employer has partnered with, so a professional can walk you through the process.
Remember an Emergency Fund
If you currently have a job, but lose it tomorrow, could you survive financially? Experts recommend saving three to six months of expenses to pay for rent, food and bills in the event of unemployment. For recent college graduates, we recommend starting small. After your payments have been made, set aside $20 a week. At the end of one year, you will have over $1,000 saved. If you’re able to contribute more to the emergency fund, even better!
Don’t Skip Health Insurance
According to a study from NerdWallet Health, the number one cause of bankruptcy in America is a medical emergency. While it can help to have an emergency fund for unexpected expenses, health insurance can greatly reduce the costs of hospital stays, testing and medications. Most college graduates can stay on their parents plan until age 26, but it’s important to start exploring your options early to be prepared for the switch.
At Ion Bank, we are committed to helping people of all ages improve their financial wellness and education. To learn more about saving money for your future, contact us today.