Understanding the financial journey of adulthood after college graduation can help you better prepare for a successful transition to life after college.

Your digital footprint and credit standing may impact potential employers’ impressions of you.

As you near graduation, you should begin planning for life after college: for budgeting, launching your career, and repaying any student loans. To set yourself up for a successful future, you should plan to hit some financial milestones, fine-tune your professional and financial presence, understand what will affect your income, and create and prioritize financial goals.

Prepare for Financial Milestones

Though everyone’s path is different, most financial journeys are defined by several key milestones. Anticipating them can help you make smart financial decisions and budget accordingly.

• First credit card. Start building credit early but wisely – understanding responsible use can help you improve your credit score.
• Student loan repayment. Know your loan type – federal or private – and loan terms to choose a repayment plan that best fits your situation. Make timely payments to protect your credit score and know who to contact if you need help with repayment.
• First home. Build credit to secure a preferable interest rate, and save for a down payment and closing costs. Down payments can range from 3% to 20% of a home’s purchase price, depending on your lender and loan type, while closing costs are usually 2% to 5% of the purchase price.
• Retirement. Save for retirement early, automatically, and consistently. If your employer doesn’t sponsor a retirement plan, like a 401(k) plan, you can establish an individual retirement account (IRA).

Guard Your Professional & Financial Image

As you prepare for college graduation and start to apply for jobs, consider how your digital footprint can shape your professional and financial identity.

• Professional identity. More than your resume, your online activity – including comments, likes, photos,
  and posts – can shape how prospective employers see you. Align your digital footprint with potential employers’ values to avoid a possible impact to your job search.
• Financial identity. Your credit history is central to your financial image and can influence loans, rental agreements, and even job prospects that require background checks or security clearance.

Uphold a positive professional and financial image by:

• Monitoring your credit. Check your credit reports at least once a year – but ideally every quarter. Address any incorrect or suspicious information included in them.
• Paying your bills. Paying bills on time and in full is the best way to build, improve, and maintain credit. Schedule and track payments for recurring due dates to help ensure you’re prepared and pay on time.
• Reviewing your digital footprint. Periodically review your social media content and privacy settings to ensure that no undesirable activity is visible to others. Consider searching your name online to uncover any associated negative content that you should address.

Understand Your Income

Securing a job significantly impacts your monthly income, but it’s essential to consider influencing factors, like taxes, retirement plans, and insurance. Your take-home pay after these deductions is your net income. Knowing where your salary is going will help you strategize your finances effectively.

• Taxes. Federal, state, and local tax obligations can reduce your monthly income.
• Insurance. In exchange for a monthly payment called a premium, insurance offers protection against potential risks or specific losses. Employer-sponsored health insurance premium contributions may be deducted directly from your paycheck.
• Savings. Start saving as early and as often as possible. Prioritize three savings areas: retirement plan, emergency fund, and debt repayment or personal goals.
• Investing. Investments can help you build wealth, but they come with risks that you should understand and accept (or reject, as appropriate).

Account for Student Loan Debt

Investing in a college education often means acquiring student loan debt. Postgraduation, your salary is one measure of that investment’s return. If your monthly payment for a standard 10-year student loan repayment plan is 10% or more of your monthly gross income – your income before deductions – it’s considered excessive.

When planning a budget for student loan repayment, factor in considerations like:

• Transportation. Bus passes, fuel, vehicle maintenance
• Housing. Rent or mortgage payments
• Income changes. Promotions or anticipated fluctuations in scheduling (like seasonal employment)
• Benefits. Insurance and matching retirement plan contributions
• Other debts. Credit cards, auto loans, etc.

Overcome Hurdles for Your Financial Goals

A starting salary might mean slow progress toward your financial goals, but it doesn’t mean you can’t make strides in reducing debt and building savings. The following are ways to mitigate common financial obstacles and make progress on your goals.

• High debt. If you have a lot of debt or many kinds of debt, explore debt management strategies, like prioritizing paying off small or high-interest loans or working with a financial counselor at a reputable nonprofit.
• Low salary. If your starting salary feels limited, consistently save small amounts to build an emergency savings fund that can earn interest and keep late fees and owed interest from eating away at your salary.
• Expensive goal. If you have a goal you can’t quite afford yet, that’s okay. Whenever possible, set aside savings for a specific purpose, like that goal. Maintaining a long-term mindset can help you stay focused on what you want to achieve.

Accurate budgeting is a key aspect of reaching your goals. Use your net income in your budget, making sure you understand how much of your monthly salary is deducted for taxes and benefits and how much of it you are actually able to spend.

Take the First Step Toward a Brighter Future

For many people, college graduation feels like the beginning of a vast journey into independent adulthood. Financial planning and preparation can help you create a sound plan for your financial well-being far into the future – and so can we. Connect with one of our skilled team members to discover financial solutions that can help you establish a strong financial foundation.