recent graduates

5 Financial Steps to Take After Graduating From College

Meg Favreau — Fri, 22 Jun 2012 10:36:12 +0000

Graduating from college can be awesome, exciting, and a huge relief. But when it comes to the current job market and student debt, however, graduating from college can also feel pretty darn daunting.

But don’t worry! With a little bit of planning, you can be in control of your finances post-graduation — and set yourself up nicely for the years to come. Here are five steps you should take to conquer your finances.

1. Create a Budget

If you don’t already have one, I strongly recommend that you create a budget. Sure, you can probably get by without one — but that’s also how you end up at the end of the month with no money in your account, wondering where it all went.

To make it easy on yourself, consider using one of the many free budgeting tools available online. These tools can securely pull in information from your various bank accounts and loans, allowing you to easily create budgets, track your spending, and set financial goals all in one place. If you haven’t supported yourself in the past, it might be surprising how quickly your new paycheck gets spent — especially since, according to a USA Today article, “most young people don’t realize they’re actually taking home about $75 of their paycheck once taxes, Social Security and 401(k) contributions are factored in.” A budget helps you ensure you have all the money for the necessities — and helps you set-aside cash for some fun stuff, too.

2. Understand and Reexamine Your Insurance Policies

While you were still a student, your insurance — including health, car, life, and renter’s insurance — may have been covered by your parents or your school. But after graduating, it’s likely that you’ll be responsible for these policies – and the costs can, quite honestly, be a little startling.

The first step in your research should be to find out from your parents or school what levels of coverage you had. Then, armed with that information, you can begin researching new policies for each of the following types of insurance.

Health Insurance

Hopefully you’ll be able to find a job with health coverage. The unfortunate fact, though, is that this is becoming less and less likely. If you were on your parents’ policy while in college, you may be able to stay on it for a few more years. Have a conversation with them about it, and if you’re able to, offer to pay any associated fees for your care. Doing this will likely be cheaper than getting your own policy.

If you do not have the option of employer- or parent-based coverage, do consider getting at least a basic insurance plan. Medical debt from an emergency can cost thousands and thousands of dollars; a basic policy helps protect you from going into wild, crushing debt. You can start your search online or with a health insurance agent. Before you do so, round up all of your medical records (these are good to have around anyway); applying for insurance as an individual requires that you answer several questions about your medical history so the insurance company can determine your risk level and decide what to charge you. Other factors that can adjust your rate include age and habits.

Car Insurance

The cost of car insurance can vary drastically depending on where you live, the type of car you drive, and factors including your age, your driving record, and even your grades in school. When applying for a policy on your own, speak with a customer service representative — they can often tell you about discounts that aren’t always available through their website.

Renter’s Insurance

If you’re renting your first house or apartment, strongly consider getting renter’s insurance. Policies are inexpensive, depending on your level of coverage, and they’ll help replace your stuff in the advent of something terrible happening, like a burglary or fire. Depending on the policy, you might even be covered if your stuff is stolen somewhere else, like out of your car or while you’re traveling.

Life Insurance

There is a very good chance that you don’t currently have a life insurance policy. Typically associated with older folks and people with families, life insurance pays out a sum to your family or loved ones upon your death. Here’s what the Illinois Department of Insurance has to say about college students and life insurance:

If you are a young college student with no dependents, life insurance is not as important as it will be when you get older and are married and/or have children. For most college students, the only reason to buy life insurance is to cover funeral expenses and debts, if there are any. Your parents may already have a life insurance policy on you that will cover these expenses. If not, you should be able to purchase a term life insurance policy for a small premium.

If you are married, and/or have children or elderly parents who are dependent on you, the need for life insurance is much greater. Still, you should be able to purchase a term life insurance policy that will provide benefits to pay your debts and provide your dependents with some financial security.

That said, even if you do not currently have family members who are dependent on you, it can be a good idea to shop for a life insurance policy now. The primary reason is simple frugality — the younger and healthier you are when you sign up for a policy, the cheaper your rate will be — and you’re able to lock those rates in. (See also: Life Insurance Calculator: How Much Insurance Do I Need?)

Another major reason for purchasing life insurance is the aforementioned debt. If you have any debts at the time of your death, life insurance can cover or help cover them — instead of passing them on to your already grieving loved ones.

3. Start Saving Immediately

I’ll admit, this Wall Street Journal article on why you need to start saving now is kind of depressing — “two-thirds of students will graduate with debt that averages $25,250 in student loans and more than $4,000 in credit-card debt.” But the same article also points out something very important — that compound interest is a powerful thing, and the earlier you start saving, the most you can take advantage of it: “If you save $10 a day at age 25, you’ll have more than $1 million by age 65, assuming an 8% annual rate of return. If you start at age 35, you’ll have $445,000. At age 45, you’ll only have $180,000.”

If you have a job that provides a 401(k) retirement plan, take advantage of it. Not only will you not miss the money (since it’s automatically deducted from your pay before the check before it hits your hands), but most employers offer matching contributions after you’ve been with the company for a certain amount of time. At that point, if you don’t contribute to your 401(k), you are turning down free money.

Don’t worry if you don’t have a 401(k) plan, though, there are still several great saving options — like Roth IRAs.

4. Talk to Your Parents About Their Finances

It’s not always a fun chat, but this is a good time to have a discussion with your parents to help better understand their financial situation and your role in the family's financial future. Questions you might want to discuss include: Are they ready for retirement? Do they expect you to support them in their retirement? If you borrowed money from them for college, can you pay them back?

One thing that you should be sure to discuss with your parents, even though it can be uncomfortable, is expectations – yours and theirs – if they get sick or need long-term care.

If they don’t already have one, encourage your parents to create a living will — this document determines who will make medical decisions for them if they are unfit, and it also outlines things such as whether or not they want to be kept on life support.

It can also be helpful to discuss long-term care for your parents. Earlier this year, USA Today reported how caring for elderly parents catches many unprepared. Sudden strokes, heart attacks, and other illnesses and accidents — while we don’t like to think about them — can have consequences beyond just health. Whether it requires a stay in a nursing home, hiring an at-home caretaker, or taking time off from your job to care for your parents, long-term care can be monstrously expensive — according to the USA Today article, “The median cost of a year in a private room at a nursing home in 2011 was $77,745…And only those who have spent most of their assets can qualify for Medicaid to pay for the nursing home.”

Long-term care insurance, however, can help cover the costs of services for this kind of day-to-day care. And once you buy it, long-term care insurance is locked in — the policy can’t be canceled by the insurance company, no matter what happens health-wise.

5. Have Fun

I know that sounds like one of those stupid suggestions that everyone ends articles like this with. But I am very, very serious about having fun. While this is possibly one of the most financially tender times in your life, it’s also a time when you probably have a lot of freedom and flexibility. Plan and make room in your budget for things like travel, culture, or even just trying new foods with friends. Remember, money can buy happiness — if what you’re buying is an experience. With a little bit of planning and balance, you can experience life and save for your future.

Are you a current college student with concerns about entering the working world? Or do you have advice for college graduates? Leave your thoughts in the comments.

This article was made possible by the support and inspiration of Genworth Financial, a S&P 500 insurance company with more than $100 billion in assets. Check out Genworth's website for more information on their life insurance and long-term care insurance products.

This article is from Meg Favreau of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Smooth Moves for Graduates

Hollis Colquhoun — Thu, 08 Jul 2010 13:46:36 +0000

You've graduated after four, six, or eight long years of college and now it's time to shout, "Hello world, I'm here!" You're eager to act, work and live like an adult and expect Mr. World to shout back, "Welcome, we've been awaiting your arrival!" Unfortunately, that's not the way it will really happen.

There are lots of graduates trying, like you, to rock the world and many other professionals who are unemployed and still trying to nab a job offer. So, you must do everything possible to polish up your personal life and beef up your financial profile to stay near the front of the line. To effectively choreograph your career, you must implement these four moves.

The Debt Tango

Take control of what you owe before your debts control you. Do you have credit card debt and student loans? Even if you have student loans that aren't payable for six months, think about them now and devise a plan of action. List all of the debts you owe, when they are due and how much you'll need to make timely payments each month.

It has been stated many times (but can't be emphasized enough): One of the most important influences on your life is your credit report. From the instant you take out a student loan, personal loan, checking overdraft account, or credit card — basically any loan — this report will stick to you like glue, keeping a running tab on your financial behavior. If you aren't responsible in handling your debts, your low credit score will feel like cement shoes, preventing you from moving forward.

Potential employers, landlords, lenders, utilities and insurance companies will evaluate you based on credit report and score. A low score signals to an employer that you probably won't be a responsible employee, and lots of debt means you may be more likely to steal. Landlords won't want you as a tenant if you have a history of being late on payments, and lenders, utilities and insurance companies will charge you a higher interest rate or require a bigger deposit if you are perceived to be a higher credit risk. So start off on the right foot, and face your debts head on.

The Money Mambo

While in school, you might have had an allowance from your parents or student loans that covered living expenses. Now that you've graduated, even if you're still living at home, it's time to start acting like the managing partner of your money.

Cash flow measures the money coming in (earnings) versus the money flowing out (expenses). Monitoring your cash flow is much easier if you create a budget. Keep track of your monthly earnings and spending, prioritize your financial needs and wants, and make adjustments where necessary. You and your money should be in sync. Unfortunately, you might not get a full-time job right away; don't just sit around and hope for the best. While you wait, go after one or two part-time jobs to create a source of income and to stay connected to business people and the job market.

Finding success in the work-a-day world will take motivation, financial organization, perseverance and hustle. Making smart money moves early will establish a good money management routine and lead to long-term financial health.

The Job Jive

Your attractiveness to an employer hinges on your personal, financial and professional profile. The actions you take, messages you send, and pictures you put on your "wall" will be viewed by everyone, including employers. Make sure your grandmother and potential employer would be happy reading or seeing anything about you or from you on Facebook, MySpace, Twitter, LinkedIn and any other social media sites. Know that employers are looking you up — Googling you — before making a hiring decision. (Google yourself to see what comes up!)

The old saying "it's not what you know but who you know" is particularly true these days. If you don't have a ton of connections in the business world, think about how you could network within the community or volunteer to help a nonprofit organization that appeals to you. Attend school alumni events. If you have a graduate degree, you're eligible to join a Young Professionals group even without a full-time job. Also, keep in mind that first impressions last. Be thoughtful about your appearance and dress professionally when appropriate.

Work hard on creating an energetic, accurate and memorable resume. There are lots of resume-building sites online to help with the latest formatting and "buzz words." A resume should be short (one page). Include accomplishments you're most proud of, the challenges you've met, and the skills you've learned that will be assets to the hiring company. Mention extracurricular talents and involvements, anything that will make you stand out (in a good way). The potential employer wants to understand your value-added to them, not what they can do for you.

The Savings Swing

Once you get into the swing of budgeting and money is coming in on a consistent basis, start implementing a weekly or monthly savings strategy. Regular savings will allow you to:

Handle an emergency expense (e.g. a car repair)
Build wealth (e.g. buy investments)
Attain short-term goals (e.g. a vacation or new TV)
Realize long-term goals (e.g. buy a house, or secure your retirement)

Even if you're in your early twenties, get into the saving routine. (You must have heard about the power of compounding, which simply means the longer your money can grow through interest and interest on interest the bigger the sum you'll accumulate.) A simplified example: saving $50 each week or $200 per month assuming a compounded 5% interest rate, in forty years will turn into $300,000.

Your employer may offer a qualified retirement plan, usually a 401k. Set up an automatic deduction from your paycheck into the plan, even if it's only 1-2% in the beginning. You'll get tax-deferred growth, reduce your income tax bill and be on your way to a more financially secure retirement.

Learning the right steps to kick-start your career and making good moves throughout your personal, financial and professional lives will reward and empower you. Today's economic climate doesn't set a very welcoming stage, but as Bruce Lee said:

To hell with circumstances, I create opportunities.

Guest Post Blurb:

This is a guest post by Hollis Colquhoun. Hollis has over 20 years of experience in the financial industry, is an Accredited Financial Counselor and co-author of Women Empowering Themselves: A Financial Survival Guide. Contact her at Women Empowering Themselves. Here are more articles by Hollis:

This article is from Hollis Colquhoun of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Resumes For Recent Grads: Translating Campus Experiences Into Real-World Skills

Julie Rains — Mon, 14 Jul 2008 19:27:48 +0000

If you’re a recent grad, I hope you've snagged the job of your dreams with a great company, perhaps after having completed summer internships or cooperative work programs with your current employer. But you may be in the midst of a job search (or as a rising senior, getting ready to launch a campaign) and wondering what should be included on your résumé and what is best left unsaid. Will the bartending gig make you seem unsuitable for corporate life? Will employers avoid those who have spent summers on church mission trips? I’ll share ways to translate class projects, volunteer activities, and campus involvement into real-life skills valuable in the workplace.

So, should you include the bartending job and church mission trips? It depends…on your career goals and other experiences. If you hope to land an event planning position with the community affairs department of a major corporation or want to build a career in the hospitality industry, then your stints tending bar for black-tie galas are relevant; but if you’ve spent the last two summers orchestrating formal dinners with guest lists exceeding 500 people or running a bed & breakfast while the owners took an extended vacation, then the bartending jobs may be eliminated in favor of more significant experience.

For the mission trips, consider your duties and the working environment. Your experiences may be impressive to a hiring manager if you helped provide medical attention to people in a foreign country and want to work in a hospital with a large immigrant population, if you tutored at-risk children and want to be a teacher in an inner-city high school, or you repaired houses and hope to start a career in construction.

To figure out what’s relevant, it’s helpful to do 3 things:

Clarify what kind of position you’re hoping to find and/or what type of company might have such a position;
Define the capabilities that the person in this position will need in order to excel and/or what types of skills the company values;
Determine the relevance of each experience (paid job, volunteer work, campus activity, or class project) to your target position and its significance relative to all of your qualifications.

Then, think about experiences that can be applied to the needs of a potential employer. If you majored in fashion design, you may have researched seasonal trends, conceptualized design themes, and selected color palettes. The computer science major may have led a system conversion, written and tested programming code, evaluated new technology, and provided technical support to users.

If you’re not exactly sure what you’d like to do after college or your dream job is not yet attainable, then consider general abilities that most any employer will find useful, such as the ability to:

Research information, draw conclusions, and present findings;
Communicate effectively through written and oral presentations;
Collaborate with people on multi-disciplinary teams;
Manage projects by setting goals, defining project components with timelines, making assignments, reviewing progress, resolving issues, and bringing projects to conclusion.

Is it necessary to have acquired these experiences in a paid position? No! You may have built skills by completing a class assignment, going on an outing with your sorority, or hanging out a friend. While you don’t want to overstate the value of the all-nighter you pulled helping your roommate study for a big exam ("provided remedial instruction to underperforming student"?), it’s okay to discuss meaningful experiences.

Examples of what you might include:

Campus club project: planned and directed a 5K fundraiser; led club members in securing business sponsorships and in-kind donations, promoting participation among students and community members, and supervising race-day activities.
Student competition: designed and built an unmanned aerial vehicle that performed specific tasks by interpreting GPS navigational data, working in collaboration with a cross-functional team.
Sorority/Fraternity: participated in community service projects that included hosting a health fair for an underserved population.
Class project: created a business plan for a proposed retailer specializing in licensed athletic apparel; developed budget for start-up and ongoing operations; devised marketing plan to drive store traffic.
Other: contributed to the development of a proposal for an art exhibit involving theme selection, identification of relevant works, feasibility analysis, and budget preparation, yielding $50,000 in grant funds.

Should grades, high school activities, interests, or other stuff be included? Consider sharing on your résumé if the item

is spectacular;
sets you apart from other students;
sparks a conversation.

Examples are earning academic honors such as Phi Beta Kappa; finishing 5 marathons in 5 months; earning the Eagle Scout or Gold Award (Boy Scouts or Girl Scouts); or competing on a high school team that placed first in a national science competition.

Hopefully, you'll uncover a few experiences that will be meaningful to hiring managers. Tell about your internship but don't forget the leadership skills you acquired as soccer captain or head of a class project. If you're a recent grad who has impressed employers with traditional work experiences and/or campus experiences, share your story.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: