After four years of college, graduation day arrives and all you can think about is what your next move will be. For some graduates, it will be more college and for others it will be a 9-to-5 reality. It’s time to pay bills. It is inevitable and for most college graduates it is a very scary bridge to cross.
According to CNN Money, “2013 college graduates are facing an average $35,200 in college-related debt.” With an entry-level salary and college-related debt, grads can easily begin to stress out. Listed are four financial tips for college graduates from Darric Boyd, Merrill Lynch financial adviser.
Pay yourself first: “As far as savings go, you want to make sure that you are paying yourself. If you carve out a minimum of ten percent of your pay from your first job and do that for the rest of your career, you will end up with a very comfortable retirement.”
Delay gratification: “The biggest mistake is buying an expensive car. First, paying a car note every month really affects your cash flow and can keep you on a tight budget for years. You’re also putting your money into a depreciated asset. You have to delay gratification for those types of material items early so that you can have nice material items later on. It’s the one thing that can change from going paycheck to paycheck to building a savings portfolio.”
Take care of loans: “It’s called debt stacking. That’s when you line up your bills by interest rate, not by balance. The quicker you pay it off, the better, but don’t pay it off in spite of saving. What you don’t want to do is have no equity or no savings, and have less debt. That does not help you if you lose your job. It’s a careful balance.”
Establish credit: “I recommend putting your monthly bills on the credit card and then paying it off at the end of every month. This will begin to build your credit. I always tell people if you have good credit, it’s like saving money. You’re going to get the best rates on everything. When you buy a house, the rate can save you $60,000 to $70,000 over a lifetime.”
