A Crash Course in Financial Literacy for College Grads
July 21, 2021
Though college can prepare you for the real world in many ways, when it comes to financial planning, recent graduates often still have much to learn. For those who are ready to take the reins of their own financial future but feeling overwhelmed as they enter the workforce, BayFirst is here to help with a post-grad crash course.
1. Pay Off Loans. When it comes to student loans, it’s best to pay as much as you can, as often as you can to minimize the duration of the loan and keep debt from increasing. However, with many new expenses associated with branching out on your own, this can be easier said than done. So, start small. Set aside the extra money you receive from work bonuses or on holidays or birthdays to pay down your loan even more. Small payments can add up. Just get started. Additionally, some companies offer employees student loan assistance. Spoiler alert, BayFirst is one. Check out the job opportunities available now, and ask about all of the benefits recent grads can take advantage of.
2. Be Sure to Budget. One of the best ways to stay on track after college is setting up a budget you can stick to. Consider all monthly expenses, including rent, utilities, entertainment, meals, commuting costs and car payments, and determine how much you can safely spend and set aside in savings for the just-in-case based on your take-home pay. Then stick to it.
3. Start Investing Now. If you’ve landed a job that offers an employer retirement plan, such as a 401(k), use it. If you are offered a contribution match (meaning your employer will match up to a certain amount of your contributions), try to maximize it. If not, consider opening an Individual Retirement Account (IRA) and making any contributions you can. It may seem very far off, but by starting to plan for retirement now, you can set yourself up for financial security later.
4. Keep an Eye on Your Credit Score. Your credit score indicates how likely you are to repay a debt when you are lent money. Lenders use it to determine if you are a good candidate for any loan you may need for what’s next. And, a good credit score will lead to better interest rates, meaning you’ll pay less money in interest over the life of the loan. You can maintain a good credit score (roughly 670 or above) by establishing credit and paying bills on time and in full.
5. Compare Bank Accounts. At the very least, every college grad should consider opening a checking and savings account to manage their money effectively while they plan for the future. Checking account holders can access their money online, at ATMs, and banking centers. They can arrange for paychecks to be deposited directly into their account from their employer, pay bills online, and more. Savings account holders can keep their cash safe while earning interest, which can pay for those unexpected expenses. There are many different types of checking and savings accounts, some with no monthly fees and no-to-low minimums to open. Explore your options with BayFirst. And be sure to ask about any promotions!
Need more ways to start the next phase of your life off on the right foot financially? Be in a class of your own and call us or stop in. We have experts who can help you find and maintain your financial footing and make sure you are ready for the next phase of life – whatever that may be.