2010 College Grad Financial Survival Guide

Graduation cake guy
Guest author today, from LearnVest

With high school and college graduations going on around us, recent college grad are finally about to enter the “real world” and start earning a REAL salary and an apartment to call their own. Sounds nice right?

But we need to ask them if they’ve thought about what they’re going to do with their new salary? Are they ready to put down a deposit for their first apartment and how much will their electric and cable bill be?  Will their new job provide health insurance?  What about taxes?! These are the daunting questions that we all face when we graduate.  LearnVest was created specifically to provide people (especially women) with a trusted place to get their questions answered.

LearnVest has created a checklist just called “I Just Graduated” – now what the heck do I need to think about around my finances? If you follow their easy-to-digest checklist of the financial steps you need to take after graduation, you’ll be fully equipped to deal with Health Insurance, Taxes, 401k’s, Cable and Electric bills, and more! Think of it as a “cheat sheet” for your finances. 

College Graduate Fast Facts:

  • College seniors graduate with an average of $4,138 in credit card debt, up 44% from 2004
  • On average, majority of people between the ages of 18 to 24, spend nearly 30% of their monthly income just on debt repayment. (A recommended amount is 10% of net income.)
  • The number of 18 to 24-year-olds declaring bankruptcy has increased 96% in 10 years
  • Over 80% of graduating college seniors have credit card debt before they even have a job!
  • 19% of the people who filed for bankruptcy last year were college students which means that one in five bankruptcy filings were by very young people
  • The total amount student debt owed today, including both federal and private loans, stands at $763.4 billion.

“2010 College Grad Financial Survival Guide”

  1. Regardless of your situation after graduation, mark your calendar with important dates that impact your finances.  You can easily download LV Financial Milestones Calender here.
  2. Figure out your healthcare plan. Figure out when your healthcare expires and be sure to take the appropriate steps to find new a good insurance plan for you.  From a financial (as well as a humanitarian!) perspective, we strongly urge you not to let your health insurance lapse.
  3. Create a Budget. How much will my life actually cost?  How much should I spend on rent, utilities, food & dining and entertainment? Manage your spending by creating and sticking to a detailed budget.  Use the LV Budget Calculator, to figure out how much your life costs (i.e. all that you spend), and how to cut those costs.
  4. Make the move. You are well on your way to becoming self-sufficient and financially savvy. Now it’s time to finally move into your new apartment and start life in a new city.  Here are some things to think about in preparation for the big move.
    • Find an apartment and negotiate a lease
    • Factor in unexpected costs (Gym, Laundry, Groceries)
    • Register to vote in your state.  If you are moving into a new state, you will need to register to vote again
  5. Understand that salary. Unfortunately, once you have a job, not all of your earnings will go directly into your wallet. Some will go to taxes, some should go directly into your savings account, and some should be put into a retirement account. That’s why it’s critical that you understand how much money you actually have to spend each month.
  6. Understand and manage your employee benefits. Many firms will offer a variety of benefits and it is your responsibility to read through and select the insurance plans that best work for you.  There is a submission deadline for all employee benefits so read carefully and be sure to get your paperwork in on time!
  7. Fill out a W-4 Form.  Filling out a W-4 is one of the first things you do when you start a new job and you will use your W-4 Form at the end of the tax year to figure the right amount of federal income tax to have withheld from your paycheck.  Your employer will provide you with this form before your start date but you can also access it here: http://www.irs.gov/pub/irs-pdf/fw4.pdf
  8. Pay your bills on time! It is imperative that you pay your bills on time in order to maintain a good credit score.  Sign up to receive your statements via e-mail. Getting your bills e-mailed to you will help keep you 100% on top of them: you will have them all in one place, instantly accessible to you at any time.  If you fail to pay your bills on time, your credit score will take a major hit.
  9. Check Your Credit Score. Check your credit score (now) for free at Credit Karma and set up reminders to check it every three months. You have the power to improve your credit score, so make it your goal to raise your score above 760!
  10. Set up an Emergency Fund. An emergency savings account is money set aside in case of a financial pothole, such as losing your job. You should aim save up enough money to cover six to nine months of your living costs, including rent. We understand that this is tough, but you never know when you might need to dip into your emergency stockpile. Especially in this economy.
  11. Start Saving…NOW. You must, must, must have a retirement account (a 401(k) or an IRA). If you open an account now, look for no opening or annual fees, a low minimum balance requirement, trades for under $10, and accessible customer service. Then, start saving!

LearnVest.com focuses solely on 18-50 year old women at all stages of their life – from college graduation to having a baby to job retirement. They can be likened to Suze Orman online, but with a young, hip, sophisticated edge. To date, LearnVest has educated well over 100,000 women and has raised over $5.5 million in seed funding.

(photo by CarbonNYC)

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  1. I Stop for Pennies May 28, 2010 at 8:57 AM

    Don’t forget renters insurance! We had several lightning strikes on our apartment complex where renter’s insurance was key. Also the people on the floor below us got completely flooded due to people above them.

  2. Everyday Tips May 28, 2010 at 8:58 AM

    The best thing I ever did was start contributing ten percent of salary to my 401k with my very first paycheck. Then I never missed the money, and I am so happy 19 years later!

  3. Ace @ aceofwealth.com May 28, 2010 at 6:00 PM

    Wonderful tips. I wish I had known even half of them when I graduated. In addition to these tips I would like to add a couple of my own.

    12. Avoid lifestyle inflation – Now that getting some good hard earned cash, don’t waste it! It’s too easy to let lifestyle inflation creep into your life and start eating away at your potential savings. Biting off more than you can chew now may end up hurting you severely for years to come.

    13. Pay down that debt! LearnVest, you mentioned that 80% of graduates have credit card debt before they even start their job. Now that you’re earning money, use it to get rid of your debt before it grows on you.

  4. MyFinancialObjectives May 28, 2010 at 6:53 PM

    I think the most important thing you listed was to start saving NOW! I am a huge proponent of compounding interest and what it can do to your savings! The sooner you get to the point in your life where the total amount of money you made in a year is greater from compounding interest as opposed to your salary, the better!

  5. boc May 29, 2010 at 8:58 AM

    I graduated from school 3 years ago and here are my suggestions.

    Live at home
    Save up
    Have multiple streams of income
    Live simple
    Consider if that diploma will really benefit you, especially in these hard times today

  6. Que May 29, 2010 at 4:31 PM

    That’s funny. This is supposed to be for people just getting out of college and I can use some of these tips now (16 years later)!

  7. Austin May 30, 2010 at 10:12 PM

    Rid yourself of credit card debt is my best advice. I talk to a lot of 23-25 year olds who still carry thousands on their credit cards and act like it’s nothing. These people have no idea how much they’re losing every month by paying interest.

    Your money is more valuable sitting in a savings account than funding a credit card. Fix this early and never look back, grads!

    Austin @ Foreigner’s Finances

  8. J. Money May 31, 2010 at 12:49 PM

    OH yeah – avoiding lifestyle inflation is KEY!!! As soon as you can learn to live on the same amount no matter how many bonuses/raises/etc you get, you’re nest egg will grow crazy fast. You can still treat yourself to some good stuff here and there, but the trick is to not keep raising your expenses every year :)