9 things a new grad can do now to ensure they have more money later. Essentially, each item should address the concerns that many new grads have – dealing with student loan debt, starting to save, figuring out what to do with a new income/paycheck, setting up retirement savings – but each with the focus of dealing with the item in such a way now that will ensure they have enough later – for retirement.
- Set Up a Roth IRA – Now is a great time to start focusing on your retirement. A Roth IRA is very beneficial as you don’t pay taxes on it in retirement. You can contribute up to $5,500 each year (as long as you’ve earned that much) and expect it to be worth over $1 million in retirement as it grows compounding.
- Prepare For Emergencies – Things happen! Whether your laptop breaks or you need new tires you want to be prepared! It’s easy to go into debt over emergencies so build up your cash reserve and don’t touch it on those rainy days!
- Know Your Benefits At Work – 401(k)’s and employer benefits can be very confusing. You’re not alone! Talk to your HR representative or Benefits Coordinator and talk about what your company offers you. If they match on your 401(k) contributions, take advantage of it. These contributions can come directly out of your paycheck and help jumpstart your retirement savings.
- Manage Your Debt – Student loans can seem like monumental right out of college. How to pay them? Where to start? Ask your lender for a complete summation of all of your loans. Focus on paying off the loans with the highest interest rates first and pay the minimum towards the lowest interest rates. Try to focus on paying a little more each month. If you wait to pay more until you are older the interest will accumulate more and be more difficult when you’re older.
- Live Within Your Means – Do whatever it takes to not spend your entire paycheck all at once. Create a budget for your spending and stick to it. Find more ways to save whether it is getting a roommate, using coupons, or getting a small part time job. Try not to splurge on unnecessary items.
- Control Your Credit – It’s easy to let debt spiral out of control but now is the time to build your credit. The most important thing you can do is know what your credit score is and make sure that everything on there is yours. Always pay on time and don’t use a card if you can’t pay it off. Be weary about opening new credit cards and if you do know what your benefits are to take advantage of them.
- Save Money Automatically- It can be tough to put money aside once you have your paycheck in your hands. Talk to your employer or your bank about having automatic withdrawals taken out and put directly into your savings account. Decide what is best to start putting aside, the goal of 20% may be tough so find a number that works for you and work up to 20%.
- Get Insured! – Not only is it illegal not to have health insurance it’s also risky! One small accident could put all your savings into a hole! Whether it’s a flood in your apartment, a car accident, or a broken ankle in can hurt you. Have insurance to protect yourself from the unknown and stay on track.
- Find a trusted advisor – Building a relationship with an advisor now is helpful and great advice. Most advisors offer free consultations and it never hurts to start learning early about saving for your future. Plus, when you talk to someone about your life goals it helps you to stay accounted for them.