Are you a recent graduate? Do you know someone who is? Maybe it’s your daughter, nephew, cousin, friend; whoever it is – we have put together helpful advice for the next stage in their life. Graduation is an important celebration that marks a milestone in your life. It’s a transition from a period of education into a new stage of personal growth. Make the most of this experience by looking towards the future and considering your finances.
No matter what stage of life you are in, there are important elements to keep in mind.
Graduating High School – and Heading to College
Here you are – a high school graduate. You have worked hard for this and your big day has finally come and passed. Now what? If you are like 65.9% of high school graduates in America, you are headed to an institution of higher education. Whether that’s a state college, private university, technical school or other place of education, you have chosen to continue your education. If this is your path, consider this when thinking of your finances:
We all hear about how expensive college is, but do you know what elements contribute to the cost of attendance? While tuition may be the bulk of your expenses, additional costs for books, meals and more add up! Here is a breakdown of common costs to budget for and how to potentially lower your out of pocket expense:
- Tuition – The cost of taking courses varies by school. Seek out scholarship opportunities in your community and through the school.
- Room and board – Lodging and food costs vary by school. Consider living off-campus your second year to save on living expenses.
- Books and school supplies – Books and school supplies can be expensive and depend on which course of study you are pursuing. Look into purchasing used books or renting books for the semester.
- Fees – These vary by school, but can include activity fees and parking fees. Fees are hard to avoid, but look at lowering the cost of these by purchasing a parking pass that is a little further away from campus.
- Equipment and room materials – This category can include a computer, printer, furniture, microwave, fridge, sheets, towels, etc. Save money by asking your school if they provide printing to you as a student or if they have fridges that you can rent for the year.
- Travel and miscellaneous expenses – This includes daily commuting to class and travel during holiday breaks. This also can include clothing, mobile and other general living costs. If you travel home over break, one way to save is to see if there are other students who would be willing to carpool with you.
Graduating High School – and Joining the Workforce
You’ve done it – graduated high school. Feeling both relieved and eager, you are ready to prove yourself in the workplace. You are not alone – about 34% of high school graduates in America decide to join the workforce or pursue other non-educational opportunities after completing high school. Don’t let your hard earned money go to waste, keep this financial tip in mind:
In case of an emergency, or another instance in which you may not be receiving your usual paycheck, it is recommended to keep an emergency savings fund. The general guideline is to have three months’ pay so that you can cover your living expenses until you are back on your feet. To calculate your monthly expenses, use this list of common items:
- Mortgage/Rent Payment
- Loans: Car, Student, Credit Card
- Insurance: Auto, Health, Life, Home/Renter’s
- Utilities: Gas, Electric, Water, Garbage
- Child Care
- Cell Phone
- Cable/Satellite TV
- Internet Provider
- Wellness Membership
Graduating College – as a Young Adult
First high school, now college. Congratulations! You have joined the ranks of the over 30% of Americans who hold college degrees. Now it’s time to put that degree to work and begin your career. Before you hit the ground running, take a couple minutes to think through your finances:
After you graduate from school, it is important to take a look at the amount of student loan debt you have acquired. It can be overwhelming if your loans are with different lenders, who will all be contacting you to get your payments started. Looking at the amount as a whole can be a daunting task as well. Coming to terms with the thought of paying off your student loan debt doesn’t need to be a painful experience. There is no need to fear, as you have plenty of options. First, see if your lenders offer income-based payments. These are designed to reduce monthly payments based on your annual income. Another option is to consolidate your student loans. Through consolidating, you have one automatic payment amortized over a longer period that usually has a lower interest rate. For more information on repaying your student loan debt, visit the Federal Student Aid website. Keep in mind that once you get going in your career, hitting student loan debit hard will become easier.
- If you are a North Dakota resident: The Bank of North Dakota recently announced a new loan consolidation program open to residents of North Dakota, entitled ‘DEAL One Loan’. To find out more, visit BND’s website. They offer options for non-North Dakota residents as well.
Graduating College – Later in Life
It takes dedication to return to college and graduate – your passion is what has taken you this far. With work experience under your belt, and now a college degree, the world is yours to take. Keep your traction going, with this financial plan:
On average, college graduates make about $17,500 more annually than those with high school diplomas only. By leveraging your new-found degree to increase your earnings, you can then begin investing towards your retirement.
To get an idea of how much you need to be investing, first estimate roughly how much money you’ll need to live on in retirement. Once you have this, calculate what will be available to you from other sources, other than your savings. This can include Social Security, pensions and 401(k) earnings. This will give you a realistic idea of what you still have left to save. After this, make goals to reach the amount you’ll need to make up the difference.
If you choose to invest in an IRA, contribute the maximum amount. For contribution limits, visit the IRS website here.
If you choose to invest in employer-sponsored plans, such as a 401(k), contribute the maximum amount to your 401(k). For contribution limits, visit the IRS website here.
Time to Shine
We know that these aren’t the only options after graduation; maybe you are joining the army, traveling with the peace corps or going to graduate school. Whatever path you choose to take or wherever life leads you – remember to consider your finances.
First International Bank & Trust, Member FDIC, EHL