Crucial Money Advice for College Grads
As the Class of 2022 is heading out into the world, they are going to face many financial decisions. Here are just a few tips to set them on the right path to financial success.
- Creating a budget – The best advice to follow is the 50-30-20 rule. If unfamiliar, after taxes, allocate 50% of income on needs, 30% on wants, and 20% on savings (if able to save more, go for it)
- Make a plan to pay off student loans (if applicable) – Take time to review your budget, and prioritize paying off these loans, you can start paying off the loans with the highest interest rates and work your way to the debt with lower rates.
- Establish a retirement savings account – Though you just graduated, take advantage of your employer’s 401K plan. This will take out the funds automatically from your paycheck and you will not even have to think about the money and only know it is being invested properly.
- Build up that credit score – This is essential for many large purchases and other essentials in your near future (from buying a car to renting an apartment/first home, etc.). A great way to do this is to open a new credit card, carry a large limit on it and never ever max it out.
- Do not rent outside your means – Housing can be a huge expense, when you are first starting out, think about living at home for a bit to start up your savings, then move on and consider roommates. No more than 30% of your total monthly income should go towards housing.
- Negotiate your pay – Though you may be starting off as entry-level, consider your education as leverage to higher compensation.
While grasping and establishing these financial ideas may take time, they will start you towards success. If you would like assistance coming up with goals, please reach out to us and we will be more than happy to talk about your future.
* Any opinions are those of the author and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
