Financial Planning for Graduates
Graduating from college is an exciting life event, but it can also be overwhelming especially when it comes to finances. The transition from being a student to a working professional can be challenging, but with proper financial planning, you can set yourself up for success.
One of the most significant financial challenges that graduates face is student loan debt. According to the Federal Reserve, the total amount of student loan debt in the United States exceeds $1.75 trillion, and the average borrower graduates with around $25,000 of debt. To manage student loan debt, graduates should consider the following strategies:
- Make a budget: Creating a budget can help you understand your income and expenses and identify areas where you can cut back on spending. This can free up more money to put towards your student loan payments.
- Choose the right repayment plan: Federal student loans offer several repayment plans, including income-driven repayment, which can lower your monthly repayments based on your income. To see which repayment plans you qualify for, and which are best suited for you, check out the Federal Student Aid Loan Simulator.
- Refinance your loans: refinancing your loans can help you lower your interest rates and save money over the life of your loan. To learn more about refinancing students loans and how it works/if its best suited for you, check out this article by NerdWallet that breaks down the process into simple steps.
- Consider loan forgiveness: certain careers, such as public service or teaching, may qualify for loan forgiveness programs, which can help you eliminate some ,or all, of your student loan debt. To learn more about the different forms of loan forgiveness, click here.
In addition to managing student loan debt, graduates should also consider these future finance tips:
1. Start saving for retirement early: even if retirement seems far away, starting to save early can help you take advantage of compound interest and grow your retirement savings. Click here to learn about Gulf Winds Individual Retirement Accounts.
2. Build an emergency fund: unexpected expenses can arise at any time, so it’s important to have an emergency fund to fall back on. Aim to save at least three to six months’ worth of living expenses. Check out this blog to read about tips to building up a $1,000 emergency fund in 10 months.
3. Avoid unnecessary debt: its easy to get caught up in credit card debt or take on unnecessary loans. Try to avoid debt whenever possible and only take on debt for necessary expenses.
Managing student loan debt and planning for your future financial future can be daunting tasks, but with careful planning and smart choices, you can set yourself up for a successful financial future. Remember, the decisions you make today can have a significant impact on your future, so start planning now.
Lisa is a recent graduate from the University of West Florida who previously interned with the Gulf Winds marketing department. She spends her time writing and updating financial blogs that tend to focus on the younger generation and those who attend college.