Planning Insights

What are the 5 most powerful financial moves a recent college grad can make?

“An investment in knowledge pays the best interest.”
- Ben Franklin

You have finally made it. You have completed a B.A. or B.S. and are now a member of the professional world. In tandem with working professionally, you will encounter new responsibilities, most namely: earning a living wage. While it may be tempting to blow your first paycheck on that Gilley suit you have been wanting since the 3rd grade, here is our list of the 5 most powerful financial things a recent college grad can do:

1. Make a list of your financial goals
   What is your comfortable living wage? Are there any big purchases you see in the next 3-5 years? What is the best place to allocate your funds? Taking 15 minutes to write out your financial goals gives new perspective and insight on where you are now and where you are looking to go in the future.
2. Make a budget
   Now that you have graduated, your financial situation will most certainly change. You may have to adjust your standard of living to accommodate your new financial situation. We suggest such applications as Mint.com or Yodlee to help you organize your spending and saving goals.
3. Make a savings plan
   There’s a saying that goes something like: a little saved now becomes a lot later. Payroll deduction or automatic transfers easily puts money away each month into an account of your choice. This way you can plan ahead for bigger purchases years down the line. Also, in order to invest, first you must save.
4. Pay off student loans
   Pay off those student loans as soon as you can. The longer you wait, the larger they can get. It is not financially wise to be in debt for very long. We suggest coming up with a monthly payment plan or seeking outside help to figure out the best way to pay off your loans.
5. Open a Roth IRA
   While retirement seems a long ways away, it makes sense to put a little money away now to start long term savings. A Roth IRA is perfect for someone college age because you only pay taxes when you put money into the account not when you take it out, such as in a Traditional IRA. Because you are currently in such a low tax bracket you will pay a lot less taxes with a Roth IRA than years from now with a Traditional IRA.