10 Financial Tips for New Grads

Posted by Madison on June 8, 2009

After countless hours studying, late nights, final exams and some parties, now it’s time to head out into the “real world”… or at least that’s what everyone has been calling it as long as you can remember.

When moving on to the adult phase of your life, be sure to take care of your financial situation. Your actions now will have significant impact on how the rest of your life shapes up financially.

Many older adults look back and say the number one thing they wish they would have done differently was learned about money management while they were young. Here’s your chance to jump start your finances!

Photography: Graduation Cake Guy by CarbonNYC

Financial Tips for New Grads

  1. Get health care coverage immediately. If it hasn’t already, your parent’s health care coverage will probably end with your graduation. Get a quote for an individual health insurance plan or sign up with your new employer’s plan. Going without coverage could have a devastating effect on your finances if you have a severe illness or accident. Make this the first thing you do… and don’t put it off!
  2. Get your own home and auto insurance. Now that you aren’t a student, you’ll need to get your own auto and renters insurance policies. Start by calling your current insurer, you might be eligible for a discount based on the length of time you’ve been with the company, but don’t forget to shop around to save on insurance premiums.
  3. Save money for your future self. Join the retirement plan at work. If you are young and your company offers it, you may want to explore the Roth 401k at work. In addition to your plan at work, begin saving money on your own for both retirement and other goals. Now may be the perfect opportunity to save a lot and use the reverse savings strategy before you have lots of financial obligations (kids, house, etc.)
  4. Start an emergency fund. Earmark some of your first dollars from your new job to build up a savings account to serve as an emergency fund. You never know when an emergency will hit, but it is inevitable.
  5. Learn about taxes. What? I know, this isn’t a fun one. However, hopefully you’re going to go from a poor college student to an highly paid worker. With that luxury comes higher taxes. Educate yourself about taxes, and you’ll be able to take advantage of incentives and deductions to cut your tax bill. Pay particular attention to the student loan interest deduction and the savers credit for retirement savings contributions.
  6. Begin payments on student loans. Begin paying your student loans right away. Your future self will thank you.
  7. Handle credit cards wisely. Use credit cards carefully to earn cash rewards. Always pay your balance in full every month. If you ran up some credit card debt while in school, begin paying it off aggressively. To save interest while paying it off you may want to transfer the balance to a 0% balance transfer credit card or explore other ideas in how to payoff credit card debt.
  8. Create savings goals. Before you commit your paycheck away, create savings goals. As a new grad, you may want to focus on retirement or a downpayment for a house.
  9. Spend money slowly. It can be very tempting with a new job to buy a new car and rent a fancy apartment. Not so fast! Wait a few months to see how your finances work out. My husband found this out the hard way.
  10. Follow your heart. Did you meet the man or woman of your dreams at school? If so, and you are planning a wedding in the future, don’t forget to check out frugal tips for the ring and the wedding.

This article was previously published in June 2008. It is reposted today with updates.

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Comments to 10 Financial Tips for New Grads

  1. Excellent tips! I especially like “spend money slowly,” as that will be the primary theme of my own graduate tip article later this week.

    Frugal Dad

  2. Good advice indeed. I also highly recommend getting started with a 401k. Even if you never plan to stay long enough to claim the company match (if you get one), you should still do it. You’d be surprised how fast time passes after you finish school. Before you know it, you’ll have a nice little nest egg.


  3. @ Frugal Dad: Can’t wait to read it! My husband ran out an bought a new car right after landing his new job…. it didn’t work out so well in his budget!

    @ WealthBoy: I agree! Start the 401k asap, great advice. I wish all employees could start contributing on day 1 to their plans without a waiting period.


  4. Ditto on spending money slowly. I think that might be the single most important piece of advice, since it keeps you out of credit card debt, prevents crazy lifestyle inflation, and means you’re saving for the future. It also means that if your dream changes, you can afford to keep following it.


  5. Madison – I did the same thing your husband did when I graduated. I couldn’t wait to buy a new car and then another and another. After a few years, I finally wisened up a little and paid one off! Now I am debt-free except for my mortgage and hoping to stay that way. Great advice!

    Jeff@MySuper-Charged Life

  6. Don’t forget the BEST RESOURCE AND TIP – learn from your parents mistakes by asking:
    – How they chose different plans for insurance and financing
    – If they could go back what would they CHANGE to improve their 20s and early 30s?
    When I first graduated, I wanted to buy a house with only considering the PMI payments and did not consider the many other implications – I asked my father for wisdom and he gave me wonderful objective advice!
    Not all parents can be objective – but read between the lines by asking them about what they learned over the first 10 years after graduating. This will give you insight without the pressure and comments focused on your current state of affairs.


  7. right on time for the class of 2008 to read this! there is a lot of good advice here!

    komodo dragon

  8. As someone who graduated just last month, I’d like to say that your tips for grads are a bit better than most. I liked the points about taxes and insurance. I think that talking about emergency funds, retirement savings, and financial goals is something that anyone reading personal finance blogs should have come across ten thousand times already. Why aren’t there any useful posts for us financially savvy grads?


  9. Great Post! I am a recent college graduate and I often blog about how important it is for college students to get on the right track. Its all about savings!!!


  10. @ Rebecca: Great tip about asking your parents for advice. Their mistakes are wonderful learning opportunities for us.

    @ Slinky: Glad you liked the tax and insurance portions. They truly are very important topics that get glossed over all too often…especially taxes.

    One chance & slinky: Congratulations on your graduations!


  11. These are very good tips. I wish I had followed some of them when I graduated. I would be wealthy today.

    I think another great suggestion I would give to someone graduating would be to trade one hour of television a week and instead use it to read a financial magazine article, blog, or book. At the end of one year you would have 52 hours of financial knowledge accumulated. At the end of 10 years 520 hours!

    This one simple task alone could keep you from making common financial mistakes and would make you less dependent on financial advisers- many who really don’t know what they are talking about themselves.


  12. There is no denying these are great tips. But what about prioritizing them?

    I don’t think it’s terribly uncommon for a recent grad to come out of school with CC debt, student loan debt & lack of an emergency fund etc… With a likely limited starting income, where do you start?


  13. check out “The Financial Mistakes of New College Grads”

    Joe Templin

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