7 Personal Finance Tips For College Grads


In a month or two, the first batch of 2011 college graduates will advance into life's next big experience - the real world. For many, financial freedom will be something new, and the learning process will be a little bumpy. Going from living in a dorm, studying all day and being surrounded by friends to paying a student loan, job hunting and struggling to make




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ends meet is one of life's toughest transitions. In other words, get ready for your finances to pull a complete 180.

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If you're graduating in a few months, there's still time to get ahead of the game and prepare yourself for the unexpected. While you're wrapping up your academics, take some time to learn some important lessons about the next steps you'll take. These tips are absolute must-knows for the next year of your life.

1. If your student loan confuses you, now is the time to figure it out.
Don't just read your loan agreements, familiarize yourself with each and every term to the last detail. Know what interest rates to expect, and figure out how much you'll ultimately be spending over your repayment term. In eight months, if you haven't budgeted for your first (of many) payments, you might find yourself a little shell-shocked. College may have been an amazing experience, but repaying your student loan won't be. Spend these next few months getting to know your loan so that you can pay it off as quickly as possible. (For more insight, see Student Loan Debt: Is Consolidation The Answer?)

2. Start saving for the short term.
Unless you have a job lined up for the day after you graduate, you need to prepare yourself for some instability. Unless you're moving home, you'll probably need to find a place to live. Plus, you'll need to put food on the table. Don't make the mistake of relying on your credit cards and racking up high-interest debt. Instead, start saving money wherever you can. In three months, you'll thank yourself for creating that cushion.

3. Start saving for the long term.
Even if you have a job lined up, rainy days happen and you should start setting aside funds for them now. You never know what could happen in these next few years, and if you're lucky enough to not need the money, you'll have a head start on your retirement fund. (Find out just how much those early savings can add up in Delay In Retirement Savings Costs More In The Long Run.)

4. Decide whether you really need a car.
Car payments, gas and repairs are extremely expensive and sometimes unsustainable on a student budget. Instead of moving to a place like Los Angeles where you absolutely need a car to get around, consider a place with a good public transit system as an alternative. These days, a car can be too much of a headache for someone with an entry level salary. (Find out why a car may not be the best place to put your money in Buying A Car: The Worst Investment?)

5. Live with a roommate or family while you still can.
Unless you are really lucky, you won't make a whole lot of money in your first year out of school. Regardless, your first year out of school is a crucial time to start building your career. You might need to take an internship or two to get to where you want to be, and you don't want to live an unsustainable lifestyle while you get there. Live at home or with friends, and embrace the fact that you'll get to spend this next year with the people you love.

6. Ask about benefits.
Health insurance, dental insurance, vision insurance, employer-matched retirement plans and other subsidies are just as important as your salary. Don't just let the best salary win your heart - take a look at the big picture before coming to any conclusions. (Get more tips in Job Hunting: Higher Pay Vs. Better Benefits.)

7. Figure out a budget.
Next time you have a few minutes, sit down with your computer and research the cost of living in the areas where you want to live. Approach your research with a blank slate - without any assumptions. Dreaming too big will only hurt you, so sit down and get practical.

The Bottom Line
The real world is an exciting place, but it's also one filled with uncertainties. Unless you have a safety net, life could really beat you down. But, you're smarter than that. Stand strong, do your research and be prepared. With the right attitude and a practical mindset, your financial situation will only get better.




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