Guiding your Grad: Financial Tips for the Post-College Journey
Did your child just graduate from college? That’s a great accomplishment! But what comes next? Here are 5 tips to help your new grad take the next steps in life!
Tip 1 – Job Search:
The top priority for your grad should be securing a job. It’s important to emphasize that they may not land their ideal job right after college. The main goal for your grad is to find a job that they believe they can excel at and one that can support their basic needs such as rent, food, or transportation.
Tip 2 – Budgeting:
How can you explain saving money to your new grad? Luckily, there’s a simple process called the 50/30/20 rule that many people follow. This process provides an easy introduction to budgeting for graduates with little or no financial management experience. It suggests allocating 50% of income to needs, 30% to wants, and 20% to savings. While this rule may not be suitable for long-term budgeting, it’s a good starting point for your grad to learn sound budgeting practices. Click here1 to learn more about the 50/30/20 rule. If your grad doesn’t have a savings account, Citizens National Bank has options. When your grad opens a savings account with us, they can tie it to their checking account and set up automatic transfers to help make the saving process as easy as possible. If you are interested in learning more or want to help your grad open an account with us, click here.
Tip 3 – Managing Student Debt:
After discussing budgeting with your grad, the next step is to determine the exact amount owed on student loans and, more importantly, the institutions where the loans are held. Then, it’s time to explore repayment options. There is no one-size-fits-all repayment plan for student loans, and each loan servicer offers different options. Many repayment plans have varying timelines, ranging from 10 to 30 years. There are numerous resources available to guide you and your grad on how to pay off student debt quickly. You can start by researching options on NerdWallet | How to Pay Off Student Loans Fast.2
Another option to consider for your grad is refinancing their student loans into one loan. One option that Citizens National Bank recommends is refinancing through College Ave.® Student Loans. To learn more about refinancing your grad’s student loans click here.
Tip 4 – Building Credit:
The next step is to help your grad establish good credit. He/she probably already has an established credit score due to their credit card or student loans. Citizens National Bank customers may access My Credit Score within online or mobile banking to monitor their score. This tool also provides tips and a payoff simulator to help improve it. A good credit score will enable them to apply for loans, purchase a car, and eventually obtain a mortgage for a home.
Tip 5 – Planning for Retirement:
While retirement planning may seem distant, helping your grad start saving for retirement is crucial after college. It’s never too early to begin planning for retirement.
Consider this example3: Say your grad starts saving for retirement at age 25 and decides to contribute $3,000 per year to your job’s 401(k) plan for the next ten years. If they decide to never contribute another cent to your retirement fund once you reach the age of 35 (which we don’t recommend doing) and plan to retire at 65, your funds will have 30 years to grow. Assuming 7 percent annual growth, your $30,000 in contributions will grow to almost $315,500 by the time you retire.
Now let’s say they put off saving until they turn 35, and then save $3,000 a year for 30 years. By the time they reach 65, they will have set aside $90,000 of their own money, but it will grow to only about $303,000, assuming the same 7% annual return. That’s a huge difference.
Visit the Citizens Wealth Management Group site here for more information on retirement planning.
1. Smith, Kelly Anne. “What Is the 50/30/20 Rule?” Forbes Advisor, 14 June 2023, www.forbes.com/advisor/banking/guide-to-50-30-20-budget/#:~:text=Applying%20the%2050%2F30%2F20,wants%20and%20discretionary%20spending%20%3D%20%241%2C500.
2. Lane, Ryan. “How to Pay off Student Loans Fast.” NerdWallet, 21 June 2024, www.nerdwallet.com/article/loans/student-loans/pay-off-student-loans-fast.
3. “When To Start Saving for Retirement” Acensus, https://www.ascensus.com/resources/news-and-education/saving-for-retirement/tips-and-resources/when-to-start-saving-for-retirement#:~:text=The%20sooner%20you%20begin%20to,thing%3A%20grow%20your%20nest%20egg..
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