I have come a longggg way since college. At that time, decisions involving money really stressed me out. I remember being afraid to use my credit card just because I didn’t know how to pay the bill! I knew that missing a payment was bad… Although I didn’t know exactly what would happen. To prevent a mistake, I avoided my credit card altogether.
Maybe you are in college right now and think that is just the most ridiculous thing you have ever heard. Or maybe, just maybe, you can relate to the feeling of just simply not knowing what to do.
Maybe you are in college right now and think that is just the most ridiculous thing you have ever heard. Or maybe, just maybe, you can relate to the feeling of just simply not knowing what to do. Click To TweetThere are money moves you should be making right now that will propel you through the painful “getting established” phase. This slightly anxiety-inducing phase will still happen, but these tips should help you get through it all faster and with more confidence!
My top tips are:
- Get a checking and savings account
- Get a credit card
- Use online banking tools
- Set up automatic payments
- Create an organized digital filing system
- Establish a “post-graduation” fund
- Know how to shop for insurance
- Learn how to file your own taxes
- Make a debt repayment plan
Let’s get all you cool cats and kittens set up for financial success (is that still how you all talk to each other?).
1. Get a checking and savings account
Perhaps your mom or dad dragged you into the local bank during your high school years to open an account. Maybe you’ve already stashed away birthday money or wages from your part-time job; that’s great! If you haven’t yet opened both a checking AND savings account, do it now. If you need more convincing for why you need both, read HERE.
If you can open a Twitter, TikTok, and Snapchat account, you are certainly capable of going through the steps to open banking accounts! The FDIC has helpful info on how to shop for the right account.
2. Get a credit card
I already discussed how managing a credit card is simple. Use the online tools and PAY YOUR BILL IN FULL EVERY MONTH. If you feel confident you will do that, here are reasons why you should proceed:
– You need to build a credit score. To get a low-interest car loan, mortgage, or sometimes even to rent an apartment, you need to prove you are a dependable borrower. This proof is called a credit score. Your credit score generally increases the longer your credit record has existed (if you make timely payments). If you can responsibly manage a credit card, getting one earlier will help you build a strong score!
– You earn rewards. You literally get paid to use your credit card. I don’t know about you, but I am not in the habit of passing up on free money.
– Fraud protection. If you responsibly use credit cards, it’s my opinion that they provide more safety and protection than debit cards. Experian has an informative article on the safety difference between the two types of cards.
3. Use online banking tools
Part of the reason I was afraid to use my credit card was because setting up an online financial account and making payments intimidated me. However, the prospect of receiving a bill in the mail and having to find my checkbook also intimidated me…
When you use online banking, it is so easy to track your spending habits, watch for fraudulent activity, and ensure you have a healthy balance. I use an app on my phone. It takes me seconds to pay my bills and securely review my transactions.
Invest the 10 minutes it takes to set up your online profile and enjoy the freedom and ease that comes.
4. Set up automatic payments
If you set up automatic payments for your credit card, you don’t have to worry about a late fee or interest charge. I had a credit card that I didn’t set up automatic payments for, and I regretted it later.
You can set up automatic payments for many of your other bills too. Every time you have a new regular payment, I encourage you to investigate the option. You can often use automatic payments for your water, gas, electric, mortgage, car loan, student loan bills and more. Don’t run the risk of forgetting to submit a payment during a hectic month.
Call your utility company or loan institution to find out how.
5. Create an organized digital filing system
I tend to be a bit old school and appreciate a paper filing system. However, during your college years you likely don’t have the space for a filing cabinet. You also might be moving quite a bit!
While many of your online accounts will store statements and important documents for a certain period, it’s a good idea to download statements and save them externally. Create digital folders for all of your accounts and back them up to an external device or cloud securely. Feel free to use my guide for filing cabinets and adapt it to making digital files.
6. Establish a post-graduation fund
You have likely been told that you need to establish an emergency fund. Generally, that means you need 3 – 6 months of living expenses saved. However, while in college and perhaps living on campus, it is a little harder to know how much you should have saved. I hope to address this topic more thoroughly in the future. At the minimum, have $1,000 set aside for emergencies.
In addition, you need to be preparing for post-college expenses. I realize that college students are all over the board financially. Some have been driving their parents’ car, living in the parents’ home, or even having some of their living expenses covered by family. Some of you reading this have been paying for all these things yourself. If you’re the latter, you already have a good idea of how much it costs to live on your own. If you don’t know, here are some large expenses that may occur somewhat upfront after graduation:
– Deposit and first months’ rent for an apartment
– Moving expenses (trucks, plane tickets, etc.)
– Down payment for a car
– Furnishings for your home/apartment
If you can, start setting aside money to prepare for these expenses now. Not every bit of extra money you have should go towards student loans or even investing. Having cash provides extra flexibility during this transition period.
7. Know how to shop for insurance
If you haven’t already been paying for your own insurance, you likely will after graduation. You have heard commercials about how to get a quote online. For the most part, it really is that simple. Look up various companies online, get quotes, and talk to a representative for questions.
Alternatively, you can find a local insurance broker who can help you find a suitable insurance company. Generally, insurance brokers are paid by the insurance company they recommend to you. Your premiums shouldn’t be increased by using a broker, but you do need to be aware of any potential conflict of interest if an insurance agent makes a larger commission when recommending a certain company.
You will likely need to consider:
– Auto insurance
– Renter’s insurance
– Umbrella liability insurance
Be aware that premiums from different companies can vary dramatically based upon what deductible you choose. Generally, your auto insurance will have a $500 or $1,000 deductible. Meaning, if you are in an accident, you will have to pay either $500 or $1,000 yourself before your insurance kicks in. Either option is fine. Just be sure that your premium quotes are based off the same deductible. Don’t be afraid to ask a lot of questions.
8. Know how to file your own taxes
This one is tough. Again, I know that some of you already do this. I also know that some of you don’t…
Honestly, TurboTax was my best friend the first time I filed taxes. I just created an account and followed the simple instructions. It was easy BECAUSE I HAD ALL OF MY TAX FILES ORGANIZED. Go back to point #5 if you skipped it. Half the difficultly of filing your taxes is just making sure you have the documents. Either a software like TurboTax, H&R Block, or a hired tax professional should prompt you to provide the proper documents. H&R Block has a helpful list of tax documents you might need.
IRS.gov can be an intimidating website, but it really is a great source of information if you have tax questions.
9. Make a debt repayment plan
Perhaps you will be one of the 70% of graduates leaving college with debt. It’s pretty normal nowadays. When your senior year starts to wrap up, plan for how you are going to pay this debt back.
If you already have a job offer with an expected salary, start figuring debt payments into your budget. You can contact your loan provider to get an idea of what your monthly payment will be. If you have an income-driven repayment plan, expect your payment to be 10% of your income.
You may realize that your budget is tighter than expected after graduation. Don’t compare yourself to others. Your friends might be buying news cars, taking big vacations, or showing flashy purchases on their social media. You may see their “success,” but you won’t see the debt or the privilege that allowed them to spend. Focus on your own goals. If you take a year to live with your family and establish yourself, it’s ok. Just never stop progressing and working towards your next target.
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Next Step: If you would like a specific guide to creating a successful budget, I encourage you to review this article next!
Become comfortable with one of these steps at a time. If you are confident in these areas before graduation from college, your transition to #adulting is sure to be smoother. Believe me, you will have plenty of other challenges to face. You might as well conquer a few of these now!
