Financial advice for recent college graduates

Georgia State Univeristy Commencement ceremony. Photo: Hyosub Shin, AJC

Thousands of college students turned their tassels recently, marching across a stage to receive their degrees and marching into real life.

With that comes responsibility, perhaps far more than many have ever experienced. It’s all a part of growing up. It makes sense to do it wisely. Graduates should be prudent when it comes to managing their finances now that the HOPE scholarship, financial aid, parents’ purses and student loans are no longer at their finger tips.

The top five list of things to know for recent graduates, from the Suddenly Frugal blog:

1. Figure out how much you can afford in payments on your student loan.

First thing to consider is how many student loans you have. If you are able to consolidate multiple loans with a single-loan provider, you can often get a lower interest rate. Some lenders also offer discounted interest rates for setting up automatic payments. Once you’ve secured all the discounts you can get, you’ll need to decide how much you are able to pay down your debt each month.

2. Avoid running up credit card bills.

Switching to debit only can help keep you aware of spending, and some debit cards even offer rewards, such as the ones that PerkStreet street offers and which give 2% cash back. If you still choose to use a credit card, make sure to pay off your balance on time each month.

3. Find housing that you can truly afford.

Beyond the obvious things, such as rent and utilities, there are other less obvious costs. For example, there’s the question of transportation. If you’re looking at a place near public transportation, that could mean you won’t need a car, which could save you $5,600 annually–the amount 25-34 year-olds spend on car-related costs.

4. Determine whether it makes more sense to buy a new or used car.

With a used car you’re still going to have depreciation, but by avoiding the first year of ownership, you save a fair amount.

5. Save, save, save.

Say you invested $10,000 when you turn 21, make no other deposits and get a constant rate of return of 7%. When you retire you’d have $196,000 in the bank. But if you wait until 35 to start? You’d have only $76,000 in the bank.

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