We all know that entering the world as a fresh college graduate can be daunting. The transition from university life to working and living on your own is inherently difficult and can come with a variety of challenges, both personal and professional.
Financial literacy is a key part of establishing independence as an adult, and a well-rounded understanding of your personal finances can give you that needed boost of confidence in post-grad life.
These five financial concepts are addressed in the Smart About Money (SAM) Financial Wellness Roadmap. SAM is an organization run by undergraduate staff and a graduate advisor who works to promote financial wellness at the University of Massachusetts Amherst. You can make a peer financial coaching appointment with SAM here.
- Budgeting
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Budgeting is an important part of financial wellness. Measuring discipline with realistic expectations around spending is just like finding any other form of balance. Make a plan, check in with yourself often, and correct when you are veering too far in one direction. The UMass Five College Federal Credit Union recommends trying online budgeting platforms to conveniently keep track of your spending habits or putting your money into separate bank accounts. This method makes it easier to separate spending and avoid dipping into your savings. Keep in mind that budgeting is not a one-time venture. Developing these skills takes time and practice, but they have the potential to seriously benefit you in the long term.
- savings
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Regardless of your financial position, knowing when to start saving and how much to put away can be difficult. And once that money is in savings, it can be tempting to take some out for expenses that might not be exactly *necessary*. However, having padding in your bank account for the first months or year post-graduation can ease the stressful transition. In the last phase of the Financial Wellness roadmap, SAM suggests saving up to $3500 for post-graduation and putting aside around $1000 in case of personal emergencies. These numbers might seem steep, but preparation is essential to peace of mind. You can consider focusing on saving during summer and winter breaks. This way, you can put more hours in and relieve some pressure off of the semester. The practice of saving can’t be finished in one deposit. Putting away a portion of each paycheck is a good way to stay consistent and better understand the timeline of your progress.
- student loans
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According to the Education Data Initiative, there are currently 42.8 million borrowers paying off their student debt. If you’re worried about grappling with debt after graduation, know that you aren’t alone. It’s important to be aware of how much debt you may have accumulated during college. If you are responsible for repaying your student loans, begin by understanding the implications of your loans and then focus on your post-grad repayment plan. The UMass Financial Aid Department has resources to guide you through loan repayment. If your parents are helping you, make sure to have an open line of communication about how much they will be contributing and what your responsibilities will be. Even with financial support, understanding the ramifications of the financial investment you have made into your degree will give you a greater sense of independence.
- credit scores
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Credit scores can determine your eligibility for loans, renting an apartment, and in some cases, job opportunities. As a concept, credit scores can feel isolating, especially if you feel a lack of guidance. Credit scores are based on your financial involvement including student debt, credit card usage, and other personal loans such as mortgages or car payments. Opening a student-friendly credit card is often the first step to managing and strengthening your credit score. The UMassFive College Federal Credit Union outlined four aspects of credit scores to understand. These include paying your bills on time, avoiding credit card debt, analyzing your credit report, and most important of all: doing your research. Use caution before opening new credit cards or taking out loans, and make sure you fully understand the implications of your financial decisions. This can make or break your financial independence!
- investing
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Investing is a popular tool used to allocate wealth. It can be risky, and it’s important to make an educated decision when you are putting your money into an investment because the outcome is never guaranteed. If you have extra money that you are interested in putting somewhere besides savings, consider researching investments you might be interested in. It can be a valuable tool for your financial future and independence, but it’s not a decision to make uninformed.
These concepts are a general overview of the important aspects of finances. If you are interested in learning more about any of these concepts, check out the UMass Financial Aid office or Smart About Money.
As you go forward in your financial journey, remember to have confidence in your abilities. Financial independence is one of the most powerful things you can do for yourself, and it’s okay to be a work in progress!
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