Incorporating financial education concepts early in your career will make a positive impact on meeting future goals.
College graduation is a special time. It marks the transition into adulthood, your first serious job and greater financial independence, where you’re responsible for everything from rent to groceries to student loan payments and much, much more.
Taking on the full weight of your personal finances may feel like a lot, but by laying the groundwork now you can set yourself up for a bright financial future for decades to come. And if you found your financial education in school lacking, there’s no need to worry. Plenty of advice — and financial professionals — are available to guide you. A good place to start is by understanding four key concepts to strengthening your financial situation.
Create a Budget
One of the very first things you should do scoring that first job after graduation is to sit down and develop a budget. While it may seem difficult and time-consuming, it’s not rocket science — it’s simply a plan to help you control your spending.
Kicking off this process starts with logging how much money is coming in versus how much is going out — plus which expenses are essential versus discretionary. Just remember that an important component when budgeting is building in a savings plan. Doing so will help you create an emergency fund to protect against the unexpected expenses that crop up, from car repairs to health care costs and more.
Pay Yourself First
Think you don’t make enough money to save some of it? Think again! Just because you’re starting out at the bottom of the workforce salary ladder doesn’t mean you can’t get into the savings game.
An easy way to tackle this idea head-on is to pay yourself first with each paycheck. “We always tell clients that they should consider their own long-term financial needs to be just as important as paying off their bills,” said Mike Evans, a Primerica Senior National Sales Director from Chicago, Illinois. “Saving or investing just a little per paycheck can go a long way toward building a mindset of factoring your financial future into your budget decisions.”
Plan for the Future
You may have just gotten your first job, but guess what? It’s already time to start thinking about retirement. Why? Because the longer you wait, the more you’ll have to put away each month to reach your retirement goals. Don’t pay the high cost of waiting! Start putting as much as you can into your retirement accounts — 3% of your paycheck is a good place to start but any amount will help.
In addition, you’ll want to also start thinking about potential future milestones, like buying your first house, purchasing a new car, or starting a family — all these major life events can quickly add up. By putting money aside now, you’ll ensure you’re ahead of the curve.
Reduce Your Debt
If you’re lucky, you’re graduating without a massive debt load and little to no credit card debt, but that’s not the case for a lot of recent graduates. While student loans are often unavoidable, it’s important to avoid adding on even more debt by outspending what you bring in each month. You’ll also want to start tackling any student debt immediately. The quicker you can reduce that burden, the better.
If you do have multiple debts, the time-proven method of debt stacking can help you get a handle on the situation before it spirals out of control. After considering the interest rate and amount of debt on each of your accounts, you pick a target account you want to pay off first, which is typically the account with the highest interest rate. When you pay off that account, you roll the amount you were paying toward your next target account. As each debt is paid off, you continue this process. When you finish paying off all your debt, you can apply the amount you were paying toward your debt to a savings or an investment account.
Even adults with years of experience can find managing their personal finances overwhelming, so if you find yourself in that boat right out of the gate don’t worry — you’re not alone and there are people who can help. In fact, getting off on the right foot with your finances is so important you may want to consider reaching out to a financial professional who can give you that extra confidence boost you need to develop a plan that will set you up for financial success for decades to come.
Primerica is a leading provider of financial services to middle-income households in the United States and Canada. Licensed financial representatives educate Primerica clients about how to prepare for a more secure financial future by assessing their needs and providing appropriate products like term life insurance, mutual funds, annuities, and other financial products. Primerica insured over 5.7 million lives and had over 2.7 million client investment accounts as of December 31, 2021. Primerica was the #2 issuer of Term Life insurance coverage in the United States and Canada in 2021 through its insurance company subsidiaries. Primerica stock is included in the S&P MidCap 400 and the Russell 1000 stock indices and is traded on The New York Stock Exchange under the symbol “PRI”.
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