This piece is part of a three-part series on money considerations for graduates. Read about money considerations for high school graduates attending college or entering the workforce.
Okay college graduates, you’re up — here are four money priorities for you to focus on in post-grad life.
If you graduated in May, hopefully you’ve found a good job and kickstarted your career by now. Or maybe you’re graduating in December and are just looking to get ahead of the curve money-wise.
Whatever your situation, we’ve narrowed down what your next money priorities should be and tips to help you navigate them.
Figure out your goals
When you start accumulating wealth, the first thing you need to do is determine what your financial goals are.
You might be itching to buy your dream car right away, but that’s not always the best decision.
Instead, you should practice delayed gratification with your money until you figure out what you want most out of life.
“Is getting to the point where you can have your own lake house important? Think about how much you need to save to make that happen,” said Kyle Aspaas, our Harrisburg Branch Manager. “If your goal is to retire at age 50, think about what it’s going to take to do that.”
If your priority is to buy your dream car, well, that’s okay too — as long as it fits into your budget.
The most important thing is that you know what your goals are and that you determine how to balance them with other financial obligations, such as paying off student loans. Which brings us to the next priority…
Make a plan for paying off your student loans
According to EducationData.org, the total average student loan debt balance in the United States may be as high as $40,274.
Whether you have way more than that or way less in student loan debt, you should make a plan for how you’re going to pay it off so you can factor those payments into your budget.
The first step in your plan should be to take advantage of the ongoing student loan payment pause that expires on December 31, 2022 — either by paying off your loans before they start accruing interest again or by saving up some money and making a lump sum payment.
Your second step should be applying for the one-time federal student loan debt relief that will potentially knock up to $20,000 off your debt.
Start saving for retirement
If you think it’s ridiculous to start saving for retirement in your early twenties, just know that we told the high school graduates entering the workforce to start saving for retirement at 18.
And in both cases, our reasoning is the same: the sooner you start saving for retirement, the more time your money has to grow.
Kyle has a daughter who graduated from South Dakota State University in May, and he encouraged her to start saving for retirement as soon as she began her career.
“I told her, ‘Start now, and you won’t miss it,’” Kyle said. “I encouraged her to contribute 5 percent of each paycheck right away. It won’t even be in her budget then, and that wealth will just start building.”
If you start now, contributing just 3 percent to 5 percent of your paycheck will have made a major difference by the time you’re ready to retire — so get on your employer’s retirement plan right away!
Meet with a Wealth Advisor
A lot of people think that meeting with a financial advisor is only something someone with a lot of money or someone nearing retirement should do.
Actually, Wealth Advisor Don Rahn recommends that you start meeting with an advisor as soon as you graduate from college and begin your career.
“When you start your career, and you start making money, that’s the ideal time to start working with a financial advisor,” Don said on our podcast episode “Your Money Questions Answered.”
No matter your starting point, a Wealth Advisor can help you get on the right track towards reaching those financial goals we talked about earlier, like buying a lake house or retiring at 50.
And — just like the other three priorities — the sooner you start on this one, the better.
If you’d like to set up a meeting with the First National Wealth Management team, send us a note.
Or, reach out to Kyle for more information or guidance on any of these four priorities. He’s currently helping his daughter navigate post-grad life, and he’d love to help you too!