Financial Tips and Tricks for the Class of 2021

Congrats class of 2021! Now, it’s time to go get a job. The good news is, employers expect to hire MORE new college grads this year compared to last year. We’re going to give you some tips and tricks on what a new college grad should do – and not do – to start off their financial journey in the real world.

What are the top 3 moves every new college grad should make when they land their first job?

First and foremost, come up with a plan to expedite paying off your student loans. Figure out what your starting salary is and craft a whole new budget around your new job. A major priority item, along with bills and necessities, should be paying off your loans as quickly as possible. This means making extra payments, sticking to your budget, and more. We’ll talk more on this in a moment. 

Secondly, set up a high-yield savings account. I cannot stress this enough. You’re likely making a bit more than you have ever in any other job, and you might even be salaried. Now that you have a professional position, start seriously planning for your future. Start saving and really building a nest egg. You’ll also want to build out an emergency fund as quickly as possible so you always have that in place in case of future financial hardships or incidentals. Your goal should be to have 3 – 6 months of living expenses stocked away (depending on your monthly expenses, number of dependents, etc.)

Finally, always look forward. How can you earn a promotion or a raise? Are you in an entry-level position right now in order to get your feet wet before you get your dream job? Figure out the best courses of action to get to where you want to be in your career. This may mean a certain number of months or years of experience in the job you have now before you can get that dream job. Make a long-term plan that encompasses your career, financial, and retirement goals later on. 

What are the best strategies to start chipping away at those student loans?

As I mentioned, paying off your student loans as quickly as possible should be one of your top priorities. You likely already have a repayment plan lined up with your lender, but if you can afford it, make larger payments and make them often. Look closely at your budget to see if you can make this happen. If you’re not in a position to make larger payments, never miss a payment. Late fees can severely impact the pace of your repayment schedule, which means more interest you’ll have to pay off. You definitely don’t want to become delinquent on your student loans; student loans can’t be forgiven through bankruptcy, so be mindful of this as you start your new life as a college graduate. 

Always stick to the budget you have in place and avoid taking on more debt if you can. This isn’t always avoidable, but you want student loans to be the majority of the debt you’re worrying about. Also, see if you qualify for any student loan forgiveness. There are various lines of work (usually in public service) that offer loan forgiveness programs and opportunities. There’s the Public Service Loan Forgiveness program for those in government or non-profit work, the Teacher Loan Forgiveness program for those teaching in public schools, and more. See what you qualify for in the way of student loan forgiveness. 

What are some common financial mistakes new grads should avoid?

One of the number one things to avoid is student loan delinquency/default. As the federal student aid government website states, student loans must be repaid. If you’re not able to make a scheduled payment at some point, always call your lender and communicate the reasons. When you give notice, express a desire to stay on top of your payments, and explain your reasons, chances are they will try to help you out. They can sometimes move a payment or lower your monthly payments for a while. This isn’t ideal and not something I’d recommend long-term (like I said, pay them off as fast as you can), but those options are way better than delinquency or default. 

Another big mistake to avoid is living above your means. This seems obvious, but this mistake is easier to make than you’d think. If you have to move money around or take out a loan or credit card to purchase something you don’t need, chances are you’re living above your means. Living paycheck-to-paycheck can happen to the best of us, but if you have the means to avoid that and put money away, you absolutely should. Sometimes that means sacrificing things you want in the short term to benefit your future in the long term. Remember, you’re working towards bigger and better things (including a bigger paycheck), so those fun, fancy luxuries can wait. It’s not permanent, it’s just for now. 

Finally, make the most of the money you do have. As I mentioned, open a high-yield savings account, look into investment opportunities, make sure you’re on top of the details of your 401(k) plan, etc. Always look to the future when it comes to your finances and plan for your goals.