Three personal finance tips for soon-to-be college graduates
Don’t wait until you graduate!
I just recently bumped into an old friend that I had not seen in a while. He has a “soon-to-be college graduate.” We started talking about today’s tough job market, and he asked if I have any advice that I might be able to pass on in personal finances for this particular age demographic. I quickly put together a three-point elevator speech that could be explained by a concerned parent in a short period of time, and here are the highlights:
- Next time your soon-to-be graduate is at a book store getting a cup of coffee, meeting with a group of friends or studying, ask them to pick up a book or two on personal finances that is directed at their age. If they can buy it, great, but even if they skim through it for a half hour at a time, over time, this will get the ball rolling that will help them set themselves up or success in what might be a very stressful time in their lives. Since they are already in learning mode this would be just a little “value added” to a well-rounded college education.
- Have them start to pencil out a budget. Even if they do not have a job lined up yet, getting them in the mindset of what to expect will pay dividends in the future. The plan may not require meticulous tracking at this point. Most of our fixed costs (expenditures that don’t change much in each budgeted time period, such as rent or a car payment) will not vary much from month-to-month. By tracking their variable expenses (expenditures that may not stay the same each month, such as food, utilities and gas) they will be able to easily recognize how economics should be influencing their spending. If auto fuel goes up by $1.00/gallon, they can quickly recalculate their costs and determine how much discretionary income has taken a hit.
- Sit down with them and go over some basic financial expectations. Maybe show them how to get a free credit report (one time per year). This will allow the two of you to see if they may already have something positive or negative on their credit report. Furthermore, this opportunity may shed some light on what will happen if they do not maintain debt payments after graduating (especially student loans).
If you are interested in learning more about personal financial literacy, please know that Michigan State University Extension offers money management programs that teach techniques on creating a spending plan and ways to “find” money to save. If you’re wondering about your financial health, take a financial health survey from MI Money Health to get your financial health score! It’s confidential and your answers never connect back to your name. This survey can help you evaluate your current financial situation, provide ideas on how you may improve your financial health, and connect you to resources in your local community.