TANIEDRA L. McFADDEN
Congratulations, Graduates! You put in the time. You did the hard work. This is probably one of the most exciting and uncertain times of your life. If you were fortunate enough, you left college with a new job or you are headed to graduate school, or you are following your passion for which college has prepared you. With all that preparation, there came an expense. Higher education can be very expensive. If you aren’t moving back home with your parents, you are going to be responsible for paying rent, utilities, credit card payments, and loan payments. It can be quite overwhelming.
Here are a few things you can do to put yourself in an educated financial position:
• Get organized. Set up a filing system for your bills, checks, tax returns, loan statements, etc. Having all your financial documents organized in one place will make the task of paying bills and reviewing your budget that much quicker. Get a list of all of the loans you took out while you were in school from your school’s financial services office and compile a list of all the credit card debt you may have accumulated. This will enable you to be ahead of the curve instead of waiting for your creditors to contact you.
• Create a budget. Figure out your monthly net income (how much money you bring into your household each month) and subtract your expenses (food, rent, utilities, entertainment, and savings). If your net income is more than your expenses and you can stick to that budget, you will be headed for financial success.
• Request your credit report. Everyone is entitled to one free credit report per year from each of the three largest credit bureaus in the United States (TransUnion, Experian, and Equifax). You can request them at www.annualcreditreport.com. Review your credit report to see what is affecting your credit score. You will see things such as student loans, auto loans, revolving credit (credit cards), and inquiries companies have made about your financial position. If you find errors on your credit report, you can dispute them and have the errors corrected. The effort to have the errors corrected will increase your credit score.
• Purchase your credit score. You can purchase your credit score when you request your credit report. Your credit score is used as a gauge by creditors to see how likely you are to repay your debt and to determine interest rates and credit limits. Credit scores range from 300-850 in the United States. The higher the score, the better.
• Put off major spending. If you landed a job right out of college, congratulations! But when you get that first paycheck, resist the urge to blow it all on the fun things. Wait until you get into a financial groove and have a bit of savings to make that major purchase.
• Make cash purchases. When you are first starting out, it is a sound practice to make purchases only with cash. This will help you to live within your means. The idea is to not incur additional, unnecessary debt. You may wonder when would be the right time to use a credit card. There are various credit cards that provide reward points for your purchases. You can take advantage of these credit card perks, however, when you carry a balance, you are charged interest on your purchases. So, unless you are able to pay off your credit card purchases every month so as to not incur any interest or if you have an emergency, you should try to make only cash purchases.
• Start saving for your retirement. It is never too soon to start saving for your retirement. There are various retirement plans available, such as 401(k)s, 403(b)s, and IRAs, that you can begin contributing to when you start working. Your contribution could be automatically deducted from your paycheck and deposited into your chosen retirement plan. Some employers will even match your contribution, up to a specified percentage, thus leveraging your savings. Retirement may seem far away, but the sooner you start saving, the more money you’ll have available when that time comes.
With these suggestions, you should be well on your way to good money management.
Congratulations, Graduates! You put in the time. You did the hard work. This is probably one of the most exciting and uncertain times of your life. If you were fortunate enough, you left college with a new job or you are headed to graduate school, or you are following your passion for which college has prepared you. With all that preparation, there came an expense. Higher education can be very expensive. If you aren’t moving back home with your parents, you are going to be responsible for paying rent, utilities, credit card payments, and loan payments. It can be quite overwhelming.
Here are a few things you can do to put yourself in an educated financial position:
• Get organized. Set up a filing system for your bills, checks, tax returns, loan statements, etc. Having all your financial documents organized in one place will make the task of paying bills and reviewing your budget that much quicker. Get a list of all of the loans you took out while you were in school from your school’s financial services office and compile a list of all the credit card debt you may have accumulated. This will enable you to be ahead of the curve instead of waiting for your creditors to contact you.
• Create a budget. Figure out your monthly net income (how much money you bring into your household each month) and subtract your expenses (food, rent, utilities, entertainment, and savings). If your net income is more than your expenses and you can stick to that budget, you will be headed for financial success.
• Request your credit report. Everyone is entitled to one free credit report per year from each of the three largest credit bureaus in the United States (TransUnion, Experian, and Equifax). You can request them at www.annualcreditreport.com. Review your credit report to see what is affecting your credit score. You will see things such as student loans, auto loans, revolving credit (credit cards), and inquiries companies have made about your financial position. If you find errors on your credit report, you can dispute them and have the errors corrected. The effort to have the errors corrected will increase your credit score.
• Purchase your credit score. You can purchase your credit score when you request your credit report. Your credit score is used as a gauge by creditors to see how likely you are to repay your debt and to determine interest rates and credit limits. Credit scores range from 300-850 in the United States. The higher the score, the better.
• Put off major spending. If you landed a job right out of college, congratulations! But when you get that first paycheck, resist the urge to blow it all on the fun things. Wait until you get into a financial groove and have a bit of savings to make that major purchase.
• Make cash purchases. When you are first starting out, it is a sound practice to make purchases only with cash. This will help you to live within your means. The idea is to not incur additional, unnecessary debt. You may wonder when would be the right time to use a credit card. There are various credit cards that provide reward points for your purchases. You can take advantage of these credit card perks, however, when you carry a balance, you are charged interest on your purchases. So, unless you are able to pay off your credit card purchases every month so as to not incur any interest or if you have an emergency, you should try to make only cash purchases.
• Start saving for your retirement. It is never too soon to start saving for your retirement. There are various retirement plans available, such as 401(k)s, 403(b)s, and IRAs, that you can begin contributing to when you start working. Your contribution could be automatically deducted from your paycheck and deposited into your chosen retirement plan. Some employers will even match your contribution, up to a specified percentage, thus leveraging your savings. Retirement may seem far away, but the sooner you start saving, the more money you’ll have available when that time comes.
With these suggestions, you should be well on your way to good money management.
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