First to the Fall 2015 graduates- congratulations on your big accomplishment! Whether you have earned a Bachelors or graduate degree, you have all completed a rigorous course of study and should be very proud of yourself! For seniors who will be graduating in May or August- you are almost there! A few more months and you will be finished with this chapter of your life, and ready for new things, which is very exciting! However, graduation often means changes in your financial situation, and you should not put off planning for these changes.
Some graduates may move to pursue new career opportunities. Remember to plan for the cost of boxes, tape, truck rentals, and more when preparing to move. You should also save up for an apartment deposit, potential utility deposit and set up fees, and new furniture and decorations for your new space. Moving always costs money, so try to save up for these additional costs so that you do not have to borrow or put them on credit.
Many graduates will also get full-time jobs or new jobs or positions, which may increase income. As your income increases, remember to make sure your financial goals are on track before you inflate your lifestyle. Many students want to increase their discretionary spending or purchase a new vehicle with their increased income. You must plan for increased costs as well though, especially if you are moving to an area with a higher cost of living or if you will need to start paying for your own health insurance, etc. that your parents’ were paying for while you were in school.
If you have credit card or student loan debt to pay off, focus on cutting costs as much as you can so that you can put extra money towards your debt, on top of the minimum payments. Try to continue living like a student so that you can use extra money to pay down debt quicker. Most federal student loans have a 6 month grace period after you graduate before you have to officially begin repayment. We suggest starting to make payments as soon as you are working and not waiting until the grace period is over unless you are having difficulty paying for moving costs or finding a job. When paying off debt, putting extra money towards the debt with the highest interest rate will save you the most money in the long run.
New graduates should also make sure they have an emergency fund of 3-6 months worth of necessary expenses (rent, utilities, groceries, car payments, etc.) in case they can’t find a job or get laid off. Emergency funds can also be used for surprise expenses such as big car repairs, laptop repairs, emergency travel, etc. An emergency fund can help you avoid situations like racking up credit card debt or getting evicted when you don’t have any income.
Graduates should also begin to save and invest for retirement immediately after beginning to work full-time. Many financial experts suggest saving 10-15% of your after-tax income for investing for retirement. This number includes any match (free money!) that you might get from your employer. Of course, if you can save more than 15%, you can set yourself up for even greater financial stability in retirement. Young adults in their 20s and 30s should have a large percentage of their investment portfolios in stocks, which are riskier investments than bonds or cash. Experts disagree on the exact proportion of stocks to bonds, but most agree that people with 30+ years until retirement should have at least 80% of their portfolio in stocks. Putting as much money into your retirement investments as you can in your first decade of working will give you much more money in compound interest than if you had waited to start saving for retirement but contributed more per month.
As always, if any UNL students have questions about money, they can contact us at 402-472-9093 or email@example.com or drop by room 237 in the City Union. And just a reminder that our services are free for all students AND alumni. See you next semester!