5 Money Rules for Recent Grads

The choices you make right after graduation, like setting up a 401(k) or creating a plan for repaying student loans, can help set you up on a path toward financial success. These tips can help. 

Financial Advice for New Graduates

From the best ways to manage new graduate credit card debt to budgeting tips and tricks, these smart money moves will help you set — and meet — both your short-term and long-term financial goals for years to come.

1. Set a Budget

As with most things in life, making a monthly budget is all about choices. You’ll need to determine which expenses are necessary and which are optional. When you understand the differences between a “need” and a “want,” budgeting your monthly income becomes easier. Many financial experts recommend the 50-20-30 budget for college graduates — 50% of your income goes toward needs, 30% toward your wants and the remaining 20% is allocated to savings or debts. 

1. Start Saving

Once you have a realistic budget, you can start saving and investing in your future. Using any gifts you receive to kickstart your savings is a smart way to use your graduation money. Your savings should include a savings account for larger purchases and emergencies and retirement savings through options like a 401(k). One of the best pieces of financial advice for college graduates is to take advantage of any 401(k) benefits offered by your first job. If your employer offers a matched percentage, be sure to invest at least that much so you don’t leave money on the table.

1. Be Smart About Managing Debt

From student loans to credit cards, it’s not uncommon for recent graduates to carry multiple types of debt. There are a variety of strategies for paying off student loan debt, so be sure to do your research to find a loan payment plan that works for you. 

Credit cards are another financial concept to master in young adulthood. As a new graduate using a credit card with a limited budget, you might find it tempting to pay only the minimum each month, but you should always try to pay more than the minimum amount due. If you pay only the minimum amount, it will take years to pay off your balances, and you’ll waste a lot of money on interest fees.

1. Invest Wisely

One of the best ways to build wealth over time is through smart investments. For many people, one of the best ways to start investing is to take advantage of an employer-sponsored retirement plan — typically a 401(k). You may also want to consider other investments, such as a tax-advantaged investment account like an IRA. If you’re not sure where to start, a financial advisor can help.

1. Safeguard Your Future With Insurance

As you begin building a career, you may also start thinking about things like buying or renting a place of your own, purchasing a new car, or spending money on things like wedding rings. As you do, don’t forget to consider renters or homeowners insurance and auto insurance to prevent emergencies from becoming financial catastrophes. Though insurance adds another item to your monthly expenses, the right coverage can save you money in the long run.

We’re Here to Help

With adulthood comes new freedom — and new responsibilities. Connect with a local Farm Bureau agent or advisor to learn how we can help you build a roadmap to financial success.