Kat’s Money Corner: The best gift to give a grad
If there are any older students in your life, you’re probably well aware that graduation is quickly approaching. Because this momentous occasion is something to celebrate, I want to share what I believe is the best gift you could give a graduate – financial advice. Thus, I will share three things I learned along the way that I wish someone had told me before I headed out on my own.
As a Parent
I started working for CommunityAmerica Credit Union at the age of 22 so I’ve had the good fortune of being surrounded by those who live and breathe financial knowledge. Their wisdom has been a huge help along the way, but making my own money gave me a deep sense of responsibility. As parents or mentors, one of the best things you can give a graduate is the ability to take charge of their own finances for the future.
If you’re assisting with college finances, make sure your student truly understands the high costs of higher ed. Put them in charge of getting their tuition to the bursar’s office on time. Don’t budge on set budgets, either. A major goal of life after graduation is independence, and that means financial independence, too. http://www.principal.com/newsletter/paga/2012fall/teens-financial-independence.htm?WT.mc_id=socRIS-PAGAFall12
Work It
If the workforce is the next destination after graduation, operate under this principle: Save, Save, Save. I once heard the quote, “The more you make, the more you spend.” What if that wasn’t the case? When my husband and I got married our goal was to live on one of our incomes and save or pay down debt with the rest.
We have lived by this ideal and although daycare costs take a big bite out of our incomes, we were able to pay down all our debt, excluding our mortgage, and save enough to pay for all our big expenses. So, instead of a lifestyle change with each raise, try to spend the same when you’re making more and save the rest.
http://blog.turbotax.intuit.com/2014/06/12/summer-savings-after-college-graduation/
Invest in the Future
Wondering how to go about saving that money? Start by contributing to a 401(k) or IRA as soon as possible. Regularly depositing money into a retirement account will make you money (three cheers for compound interest!) in the long run; these investments are a great way to start feathering a long-term nest. Did you know that you – and your partner – could each put up to $10,000 of IRA savings toward the purchase of your first home? Start saving as soon as you can for the biggest return on investment. https://www.communityamerica.com/traditional-ira
To Their Credit
For many, graduation is the gateway to making some very adult decisions. How to establish credit is one of those choices. A credit score can make a world of difference! It would be nice if we could pay for everything with cash, but it often doesn’t happen that way. Having a good credit score helps you qualify for an apartment, get a cellphone and pay the least amount of interest on loans when you need one.
However, be weary of credit card companies who prey on current college students and graduates. While credit cards can help build credit (if used responsibly), that doesn’t mean you have free money. To build your credit score, you need to pay off that credit card each month. We follow the old adage, ‘if you don’t have it, don’t spend it.’ Don’t put anything on a credit card that you cannot immediately pay off. Granted there are always special exceptions, but this is a good rule of thumb to follow.
So graduates, here it is: Spend wisely, save as much and as often as possible and treat your credit responsibly to save yourself both money and heartache. Follow these simple rules and you’re well on your way to financial success.
Kat's Money Corner is posted on Dollars & Sense every Tuesday. Kat Hnatyshyn, when not blogging or caring for her little ones, is a manager with CommunityAmerica Credit Union. For more financial chatter, click http://twitter.com/savinmavens.
This story was originally published April 28, 2015 at 1:00 AM with the headline "Kat’s Money Corner: The best gift to give a grad."