Recent college graduates - Now is the time to get your finances in order
College graduates can start off on the right financial path by following these tips.
Graduating from college is the beginning of a significant chapter for many, and having your finances in order is very important. As you embark on this next chapter of life, Michigan State University Extension suggests you take the following tips into consideration:
- Get organized. The average college graduate can have up to 12 student loans. If you went to graduate school, you probably have even more. Compile a list of all your loans to keep organized. For help in compiling this list, go to the National Student Loan Data System for federal student loans and check your credit report for any private student loans. Federal student loan repayment will begin six months after you leave school. Depending on the private student loan terms, some will start repayment right after leaving school.
- Create a monthly financial plan. This is also called a budget. Know what you have to work with for income and what your expenses are so that you don’t overspend. If you start planning your spending now, you can develop good habits that will make your life a lot easier. There are several tools available to help you create a plan that fits your personality. Go to MI Money Health for tools to get started. This tool also helps plan how to afford your student loan payments when they are due.
- Control and manage your debt. Be thoughtful about acquiring any new debt until you have established a plan to start paying back your student loans. Depending on your income, you may need to consider enrolling in an income-based repayment plan for federal student loans to make them more manageable to pay.
- Start saving. Start by creating an emergency fund. Typically the goal is to put aside about three to six months of basic living expenses. At the very least, have $1000 set aside for unplanned emergency expenses. As part of your saving plan, take advantage of your employer’s retirement programs as soon as you can. Oftentimes, employers will match whatever funds you save for retirement. The bonus here is that the younger you start your retirement saving, the better off financially you will be in your later years.
- Get insured. Health care coverage is very important. Depending on the policy, once you graduate you may no longer be covered by your family’s health care plan. Meet with your employer to review what they have to offer for health care insurance. If your employer does not offer health care coverage, you may purchase your own policy through an independent insurer or through the federal marketplace. Living without coverage could have devastating effects on your finances if you have a severe illness or accident. Be sure to secure health care coverage for yourself as soon as possible.