First and foremost, congratulations to the class of 2018! You have now entered an exciting period of your life where you can follow your passion out in the “real” world. Now is also the time, however, where you have to start thinking about your career, a place to live permanently, and paying off your student loans. When it comes to your student loans you typically have a grace period of 6 months after graduation until you have to start repaying. You should, however, start making a game plan. Here are some tips to help you get started:
By 25 years old, you should have some grasp of how to take care of your finances as you begin your career.
You should know:
1. The three basics of a solid financial foundation:
Credit card debt paid off, emergency fund stocked up, and retirement account(s) in existence and growing. Everything else (travel, homeownership, investments) should come after.
2. How to create a budget.
Because without one, you may not reach any of your goals, like buying a home, paying off your credit card debt or traveling the world.
It's Valentine's Day! If you’ve got a significant other, I highly recommend you keep the spark of your relationship alive and find ways to show you appreciate each other, every week and every day, if possible.
Look for little, inexpensive ways to be romantic, and it will pay off for your relationship in innumerable ways.
Think about how much sooner you might be able to accomplish those big financial goals you've been dreaming about — buying a new car, saving up enough for a down payment on a house, or finally finishing that home improvement project — if you could just find another, say, $500 to spare in your budget each month.
We know what you're probably thinking: That sounds great in theory — but it's practically impossible to achieve. Well, that's exactly what 33-year-old psychotherapist and Ph.D. candidate Lanada Williams is striving to do.
Williams wants to save up to buy a house in Washington, D.C., to share with her partner and 6-year-old son. But the country's capitol tends to be an expensive place to live, so she's finding it difficult to put away enough every month to reach her goal.
Fortunately, even the best-built budgets typically have room for some improvement. A tip? Learn to pinpoint those improvable spots and then make small adjustments that don't feel disruptive. "No one starts training for a marathon by running 26 miles," explains David Blaylock, CFP® withLearnVest Planning Services. "So you need to set a goal you can work toward over time."
To prove it may be possible to free up extra cash on a tight budget, we asked Williams to share her monthly expenses with us, so Blaylock could help retool her priorities in order to work on saving more for the house of her dreams.
Whether you get your financial tips by asking friends and family or checking out library books, attending seminars or searching online (at sites other than DailyFinance), impractical pieces of advice abound.
Too many personal finance experts tend to populate their cable appearances, books, columns and blogs with the same simple tidbits. But some of that common advice is also ... useless. For each of these three cliched tips, let's look at some better alternatives.
1. In Debt? Cut Up Your Credit Cards
Certain financial gurus advise people in debt to cut up all their plastic and consider using credit cards the eighth deadly sin. Here's some advice: DON'T
People land in debt for various reasons, and some -- like student loans -- don't have anything to do with credit cards.
If being a unable to pass up a sale or discount clothing bin is your trigger for getting into massive amounts of debt, then put your cards in a lock box and back away. If you fell into some bad luck and used your credit card for an emergency, consider a balance transfer.
But just because someone is in debt and wants to get out of it doesn't mean they're going to stop spending money entirely. People still need to eat, gas up the car, and deal with the occasional unexpected expense.
Some may counter that it's best to use a debit card, but consider the ramifications of debit card fraud. A compromised debit card gives thieves direct access to your bank account. While most banks will cover the majority of money taken from your bank account, it's an extreme hassle to deal with. When a credit card is compromised, the issuer typically reacts quickly -- possibly even before the customer notices -- and offers 100 percent fraud protection. A credit card should be used for all online purchases, and you need one to rent a car -- otherwise you'll get a hard inquiry on your credit report for using a debit card.
It also helps to have a low-interest credit card for emergencies. Think of it as a fire extinguisher housed in a glass case. You don't want to break that glass unless you really, really need it. But you do want the fire extinguisher to be there.
Forget the "freshman 15," the dreaded additional pounds freshmen frequently pack on when they settle into life on their own. More important are the 15 smart financial moves you need to know to get through freshman year and beyond without racking up unnecessary debt.
"Waiting until after college to take control of your finances could cost you," says Nick Certo, senior vice president in University Banking at PNC Bank. "And like any good fitness regimen, getting started is half the battle."
Here's how to pass finance 101.
1. Be careful with credit
Free T-shirts are the late-night burritos of finances, Certo says. "They look good now, but you'll pay later. Think twice before signing up just to score some cool swag," he says.
It's not worth it to saddle yourself with a high-interest, annual-fee credit card that you don't need. Buy a T-shirt instead, and your bank account will thank you later, says Jackie Warrick, the chief savings officer at CouponCabin.com.
Remember that a credit card doesn't equal free money. If you can handle a credit card, start with a $1,000-limit card that offers points or other rewards and pay your balance monthly. "Don't look at your credit limit as a goal for spending," says Steve Weisman, a senior lecturer at Bentley University. "Carrying too high a balance on your card can hurt your credit and cost you more." Late fees can add up quickly.
Research which card makes the most sense given your spending habits and paying ability. Look at the annual percentage rate, annual fee, grace period and penalty fees, says Todd Mark, vice president of education for Consumer Credit Counseling Service of Greater Dallas.
Also, keep track of your credit score and your credit report.