Congratulations Grads! Top 10 Tips for Financial Freedom

May 8, 2019

College graduation is truly a joyous event. Grads get to enjoy the fruits their labor, wear the hat of success, and fall privy to older adults dispensing all kinds of life advice. We would like to join their ranks and provide you with some tips to feeling free, financially that is.

Having a plan in place before getting your first paycheck will ensure surviving the transition into independence with the least stress possible. Here are the top 10 tips on building a strong financial foundation both during your college years and immediately following your graduation.

1. Calculate Your Expenses

There is more homework to be done. List out all the costs of living expenses such as rent, car payments, phone bill, transportation, food, insurance, dining out, wearing fancy threads, and entertaining yourself. The lengthy list will surprise you. This “expense list” can be done with pen and paper, an excel file, or even a budgeting app to track your expenses.

2. Learn to Budget Your Life

You can soften the blow of the above expense list by learning the basics of budgeting. A budget is simply a plan for how you spend money each month. If you feel overwhelmed, a budgeting app can easily show you where your dollars are going in a very realistic way. After you know your expenses, subtract them from your income to make a basic budget. Your income includes the money you earn from working, side gigs, stock dividends, and any money your parents may regularly provide.

3. Learn to Live Within Your Means

Back to that budget. Try your best to meet your financial obligations before you start to spend on frivolous items that aren’t necessary for survival. Enough said.

4. Pay Yourself First

This is a fun one. Have money taken directly out of your paycheck before you even see it. As in, have a set amount go into a savings account each month and the rest into your checking account. You will thank yourself at the end of the year for the little cushion you have accumulated.

5. Don’t Ignore the Student Loans

If you borrowed for any portion of your education, make sure you do not disregard those payment statements or payment emails. If you do…the U.S. Department of Education will put you into “default status.” That is a bad place to be. Eventually they will take the money right out of your bank account or withhold your income tax return that may be due to you. Yup, just like that. The first thing to do after graduation is to get in touch with each lender and get yourself on a repayment plan. There are many flexible plans to choose from such as an “income driven repayment plan” which allows for smaller payments based on what you can afford. Then learn what your monthly payment will be and make sure you pay it on time. Note that your first bill will be due six months after graduation.

6. Avoid Accumulating Debt Whenever Possible

Debt can quickly become overwhelming and will likely follow you for years beyond college. This often starts with the plastic villain known as the credit card. Of course, keep a single credit card handy for emergencies, but try to avoid using it for day to day purchases. If you insist on using a credit card for frequent purchases, find a card with a good rewards program where you earn points for dollars spent. Lastly, try to pay off the full balance each month. This will avoid those scary interest charges and can also help you to grow your credit score.

7. Check Your Credit Score

There’s a new number in town that is now more important than knowing your social security number by heart. Your credit score. Pay one of the established credit reporting companies to get a hard copy of your credit report with all the details including credit score, possible outstanding payments due, and other default items you may not even know about that are tarnishing your financial reputation.

8. Brush up on your Employer’s Benefits

Take advantage of your employer company benefits, such as a 401(k) plan, life insurance benefits, legal benefits, and health benefits. Meet with the Human Resources Department and find out all the fine details such as any company contributions your employer may offer.

9. Prepare for the Future

It is time to think about adult stuff, like having an emergency fund equal to three months’ worth of living expenses. Other crucial items are estate planning documents such as a Durable Power of Attorney, Living Will, or a Last Will and Testament. If you decide to purchase a first home, then it is also time to get a Living Trust. Getting a free consultation with an estate planning attorney is a necessary first step to getting financially organized.

10. Travel, Travel, and Travel

Reward yourself for your career goals, or at least, the full-blown effort you are putting into getting the career you want. Youth is the time of travel and it is important to see the world and learn new cultures. Therefore, we recommend you set aside some funds to travel. It is now or never.

If you’ve recently graduated from college, congratulations! If you are still in school and reading this article, you are well ahead of the game. OC Estate & Elder Law is very proud of all the college grads. We wish you success, happiness, and offer you a free consultation to learn more about the estate planning essentials that every graduate should have. Contact OC Estate & Elder Law at (954) 251-0332 or to receive a personalized consultation regarding all your financial options.