Congrats, grad.  You made in through college.  You learned a lot, I’m sure.  You know all about Pythagoras’ Theorem .  You can recite Bryon and discuss Joyce.  You probably speak Spanish, French or Latin.  But we know as well you do:  personal finance is generally not something that one learns about in college.  And that’s a shame, because whether you like to admit it or not, now you’re entering the real world, and managing your money properly is incredibly important. We also understand it can be a little daunting, which is why we’re here to help.       

What complicates things is that thanks to the current job market, you might not have money to manage.  Worse than that, many of you are leaving school with a significant amount of debt, thanks to student loans and unpaid credit card bills.  So what’s a recent grad to do?  Not panic, for starters.  Following some simple steps can ease your transition into the workforce. 

Get a Part Time Job Until You Score Your Dream One:

You’ll get your dream job … eventually.  But, until then, don’t shy away from getting a part time gig to pay the bills.  You’ll guarantee yourself some weekly spending cash and you’ll appeal to prospective employers who will admire your eagerness to join the workforce. 

Put Yourself On a Budget:

Whether you’ve secured employment pre-graduation or you’re working your part time gig, you should figure out how much it is going to actually cost you to live.  You’ll need food and, probably water, but most importantly, you should calculate how much you’ll have to pay back each month on your student loans and credit card bills. Finalize your payment plan before introducing additional monthly expenses. 

Don't Spend Money Before You Actually Have It:

If you do manage to land a job, remember that $45,000 a year looks a lot different after taxes. Also keep in mind that portions of your check will go to paying off your benefit plan so calculating your monthly income based on your yearly salary doesn’t exactly paint an accurate picture.  Wait to get your first paycheck before finalizing your budget.   Or, at the very least, don’t run to the nearest Best Buy the second your offer letter comes in the mail

Calculate Your Vices:

It may sound silly, but understanding the long term scope of your spending habits (such as how much money you spend on Starbucks Coffee or, dare I say, beer) can really put personal finance into perspective.  Learning how much money you spent on things you don’t need can help you to better conceptualize how much you spend on the things you do.  

Check Your Credit Score:

So many people – employers, realtors, insurance agencies- check your credit score.  It might as well be stamped on your forehead.  Generally speaking, a good credit score is around 700 or above.  But A bad credit score can cost you a lot of grief (working at a Renaissance Fair isn’t even the half of it) so if you’re in trouble, you need to know.  If you haven't done so already, you should get a Free Credit Report.    

Don't Screw Up Your Credit Score

This entire country is run on credit.  No, really.  Everyone has to borrow to get ahead, but no one is going to lend you anything if you can’t prove that you can pay them back.  Having a bad credit score can prevent you from getting that apartment you’re dying to move into or leasing that car that you need for your commute.  If you’ve managed to make it through without any credit card debt (and I understand how hard that might be, seeing as how they practically hand them to you on move-in day freshman year), try your best to keep it that way. 

Reap Thy Benefits:

Most graduates get that they need to make money.  Fewer understand that they really need benefits.  Lucky for the class of 2010, the new healthcare plan will allow students to stay on their parents’ plans until they turn 26.  Regardless, you need to be aware of how important it is to have health insurance if you are going to plan properly for the future.  You should also take advantage of your employer’s short-term and long-term disability programs and sign up for life insurance (if they’re offering) whether or not you have dependents. 

Enroll in 401(k):

A retirement plan is probably the last thing on your mind.  After all, you just entered the workforce.  You probably want every hard-earned penny that comes on your check.  But if you read up on 401(k) plans, you’ll learn that not signing up for one is, well, kind of silly.   When you elect to "defer" a portion of wages into an employer-sponsored Retirement Plan, you are doing so tax-free.  This means you are not only saving the money you are putting into the account, you're not losing any of it to taxes.  So, basically, your post-401(k)  check often doesn't look that different from your pre-401(k) check. You can also put your money into a no-to-low risk account if you’re scared by the idea of investing.  And, if you’re lucky enough to work for an employer who matches part of your investment, well, then, not signing up is like throwing money away.  And everyone knows not to do that. 

Still don’t quite understand 401(k)s? We do. Check out our massive archive of 401(k) stories and you’ll be a pro in no time!

Set Up An Emergency Fund:

Unfortunately, securing post-College employment doesn’t mean that you are set for life.  And while no one likes to think about disaster befalling them, you need to be prepared.  Set up a savings account and put a small portion of each check into it.  Your goal should be to accrue enough money to cover three to six months of living expenses.  Knowing how much money you will need, of course, involves knowing your budget. I know, we sound like a broken record, but this stuff is important.

Finally, if you’re really freaking out about your student loans, it’s worth taking a couple minutes to read this story about a government initiative to help people erase college debt.

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