It is that time of year again when soon-to-be graduates think about life after college and, notably, spending money wisely.
Graduates will take different paths after May 22, and Marquette financial experts provide insight for whichever direction they take.
Finance instructor Lora Reinholz said recent graduates need to realize they are responsible for short- and long-term goals as they start their post-college lives.
“Think before you spend because tracking the money you have available can help you budget and save at the same time,” Reinholz said.
After graduation, students can start saving for retirement, investing in stocks, going to graduate school or paying off student loans.
For the first months after college, it’s recommended to track income and expenses, organize files for major purchases and accounts and save money whenever possible.
“It’s important to think about how you can use your purchases five years from now, not just in the moment,” Reinholz said.
Employers can allow depositing paychecks into more than one bank account. Having multiple accounts allows graduates to put money into savings accounts, day-to-day purchase accounts and reoccurring payment accounts for rent, phone bills, insurance and other expenses.
Accounting and business instructor Michael Browne said millennials typically waste money when making major purchases such as appliances, automobiles or houses.
“Control the small stuff and wasteful spending by using a budget, but focus on the big purchases and don’t sweat the small stuff,” Browne said. “This budget should include estimates for all expenditures including living expenses, fun money spending, student loans and savings.”
Associate accounting professor Jim Trebby said paying off credit cards in full each month is extremely important. Credit cards can build up credit but only if they are used in a smart way.
Paying off credit card debt can be expensive, so it is advised that graduates stay on top of their purchases by using a financial calculator to check in on debt and investments. Reinholz advises that students use AnnualCreditReport.com and check it annually.
To avoid or minimize identity theft, let a trusted family member or friend know where to find important items like bank accounts, outstanding loans and passwords in case of an emergency. Keeping social security information private will also help.
Trebby, Reinholz and Browne suggest that recent graduates establish their 401k plans, set up an emergency fund to cover expenses for three to six months, get renters and life insurance and spend money wisely while having fun along the way.
“By using a budget and making smart choices with your money, you will be on your way to a life of wise financial management and independence,” Browne said. “But don’t forget to celebrate your success of graduating college.”