Wes Moss: Financial advice for college graduates

Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here Monday mornings.

Wes-Moss-032011-USE-THIS-VERSIONCongratulations on graduating. Now comes responsibility.

Good news for this year’s college graduating class: Corporations will reportedly hire 19 percent more graduates than in 2010. Not bad considering that just two years ago companies were laying off 25-year veterans.

So congrats in advance on that first job. Now comes the hard part: Learning to manage and maximize the money you will earn in the coming years. Here’s some advice to get you started:

Make a Budget. It’s a simple but powerful way to make sure that you control your money — and not the other way around. Here’s how:

1. Determine your bi-weekly take-home pay – that’s the after-taxes amount deposited in your bank account.

2. Multiply this number by 2 to determine your monthly take-home pay.

3. Subtract the following expenses:

  • Rent
  • Car payment
  • Car insurance
  • Other insurance (renters’, supplemental health, etc.)
  • Groceries (approximately $50/week is a good average)
  • Utilities

4. Take a look at what’s left over and decide how much of this sum you want to save. I suggest banking 10 to 15 percent of your after-tax income – 10 percent minimum starting out. For help deciding where and how to stash this cash see my blog. But only do this after you have paid down your college loans and other debt. Focus on this first. Debt is a crippler.

Anything left? This is your discretionary spending cash. Remember you don’t have to spend it all. Try to limit your entertainment/party spending to something like $50 a week, and save the rest. Again, if you have debt outstanding, you need to seriously limit your discretionary spending and use that money to get out of the hole.

Stick to your budget. Get a free account on Mint, buy a personal software program such as Quicken, or just use a simple Excel spreadsheet like I do. Begin tracking your expenses from day one so you can make adjustments early as opposed to waking up and realizing you have $20,000 in credit card debt.

Forget about keeping up. Just because your buds are buying boats and BMWs a year out of school doesn’t mean you should, too. You are your own person and have your own plan — one that is quite possibly smarter than your friends’. Stick to it.

You don’t need to own a house two years out of college. Get your financial foundation poured before you even think about buying a home. Are there some good deals on houses out there right now? Yep. But remember, a house costs much more than the purchase price. There are endless ongoing costs, including maintenance, furnishings and insurance. Buying a house in this market could limit your ability to relocate at a time in your career when many new opportunities may come your way.

Happiness is priceless. Too many college graduates accept the first job offered and end up miserable. No matter how much money a position pays, nothing can compensate for unhappiness and its side effects. Pursue your passion, love what you do, and the money will follow.

– By Wes Moss, for Atlanta Bargain Hunter

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