{"id":355970,"date":"2022-04-20T07:00:00","date_gmt":"2022-04-20T13:00:00","guid":{"rendered":"https:\/\/www.creditrepair.com\/blog\/?p=355970"},"modified":"2022-04-19T11:10:22","modified_gmt":"2022-04-19T17:10:22","slug":"financial-advice-for-recent-graduates","status":"publish","type":"post","link":"https:\/\/www.creditrepair.com\/blog\/finance\/financial-advice-for-recent-graduates\/","title":{"rendered":"13 pieces of financial advice for college graduates"},"content":{"rendered":"\n
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Disclosure regarding our editorial content standards.<\/a><\/p>\n\n\n\n

The feeling that comes with graduation is a bit hard to describe\u2014a combination of relief at the end of exams, excitement about the future, pride in your accomplishment and dread of the real world knocking at your door. Unfortunately, not only will those ever-present student loans<\/a> soon come due, but you\u2019ll also need to start building credit and saving for retirement.<\/p>\n\n\n\n

Schools often don\u2019t teach their students how to actually navigate the real world. So, we\u2019ve put together a few key pieces of financial advice for college graduates to help you get started on the right path.<\/p>\n\n\n\n

1. Always pay on time<\/h2>\n\n\n\n

The first, most important rule of personal finance is to always pay your bills on time. Whether it\u2019s a credit card statement, power bill or car payment, you need to make at least the minimum required payment before the due date.<\/p>\n\n\n\n

With typical late fees coming in north of $30, the cost alone is a good reason to pay on time. But late fees aren\u2019t the only reason to avoid late payments; your credit score is also a strong incentive.<\/p>\n\n\n\n

Your payment history is worth up to 35 percent of your FICO\u00ae credit score, and every late payment reported to the credit bureaus can cause your credit score to drop by dozens of points. Bad credit not only makes it harder to qualify for new credit, but can also mean higher interest rates and fees, as well.<\/p>\n\n\n\n

And even one reported delinquent payment can cause years of damage; up to seven years, in fact, as that\u2019s how long delinquent payments live on your credit report<\/a>.<\/p>\n\n\n\n

2. Take advantage of automatic payments<\/h2>\n\n\n\n

Given that the most important rule is to always pay on time, you should do everything you can take care of that without too much effort. So, if you\u2019re at all prone to forgetting payments until the last minute\u2014or, worse, entirely\u2014you should probably look into setting up automatic payments.<\/p>\n\n\n\n

Most banks will allow you to set up regular payments from your checking or savings account, with the ability to set your chosen due date and even the amount. Of course, you\u2019ll need to be diligent to make sure you always have enough money in your account to cover any automatic payments.<\/p>\n\n\n\n

3. Build a budget with the 50\/30\/20 rule<\/h2>\n\n\n\n
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While everyone should put together a proper budget, it can be especially important when working with limited income and\/or trying to pay down debt<\/a> (such as student loans).<\/p>\n\n\n\n

A detailed budget will be the most effective, but even a simple budget outlining savings, bills and discretionary funds can keep you on track and make sure you have enough money to cover your necessities every month, which will help keep you from accumulating debt. When creating your budget, make sure that your expenses do not exceed your monthly income.<\/p>\n\n\n\n

Along those lines, a key part of that budget is the savings portion. Before you put any money toward extra expenses, like new clothes or meals out, you should pay your savings account<\/a>.<\/p>\n\n\n\n

For the best results, treat your savings like a bill that must be paid each month before you can have fun. You\u2019ll thank yourself in an emergency when you don\u2019t need to take on expensive debt to cover an unexpected expense.<\/p>\n\n\n\n

A helpful budgeting trick is the 50\/30\/20 rule. Set aside 50 percent of your budget to essential expenses like rent and food. Use 30 percent for nonessentials like shopping and entertainment. Put the final 20 percent toward savings. This could include your emergency fund or 401(k). This rule of thumb helps you prioritize your needs over wants<\/a> and keep your savings top of mind.<\/p>\n\n\n\n

4. Start paying off student loans<\/h2>\n\n\n\n

This one can feel a little overwhelming, but taking inventory and making a plan can help paying off student loans feel much more manageable.<\/p>\n\n\n\n

The first steps are to find out how much you owe, what type of loans you have (private, federal or both) and what the interest rates are. You can check the Federal Student Aid site<\/a> to view federal loan details. For private student loans, contact the lender to view your account information and details.<\/p>\n\n\n\n

Next, note the repayment terms. Then, make a plan and start making your payments on time.<\/p>\n\n\n\n

Paying more per month can help pay off your loan quicker and save on interest. If you have $30,000 in debt with a 5.8 percent interest rate, it will take you an estimated 10 years<\/a> to pay off the loan if you pay $330.05 per month, and your total interest paid will be $9,606.77. However, if you pay $391.32 per month, you\u2019ll pay off the loan in eight years and your total interest will be $7,657.47.<\/p>\n\n\n\n

Missing a loan payment can reflect negatively on your credit report<\/a>. Try to make more than the minimum payment and find a repayment plan that works well for you.<\/p>\n\n\n\n

You can also consider refinancing to get a better interest rate on your loans. If you have multiple student loans, consolidating your debt<\/a> may also help save you money.<\/p>\n\n\n\n

5. Start building credit<\/h2>\n\n\n\n

If you didn\u2019t start building credit as a college student<\/a>, now is the time to begin.<\/p>\n\n\n\n

Your credit score is a number between 300 and 850 that many lenders will look at to determine how likely you are to pay off your debts. Employers and landlords sometimes check your credit score, too. A score above 600 can help you secure lower interest rates on loans.<\/p>\n\n\n\n

FICO is the most commonly used credit scoring system. Here\u2019s what makes up your FICO score<\/a>:<\/p>\n\n\n\n