student loans

5 Financial Tips for Recent College Graduates

Robert Ingram Contributed by: Robert Ingram

financial tips for recent college graduates

Congratulations Class of 2019! This is an exciting time for recent college graduates as they begin the next phase in their lives. Some may take their first job or start along their career path, while others may continue their education. Taking this leap into the “real world” also means handling personal finances, a skill not taught often enough in school. Fortunately, by developing good financial habits early and avoiding costly mistakes, new graduates can make time an ally as they set up a solid financial future.

Here are five financial strategies to help get your post-college life on the right path:

1. Have a Spending Plan

The idea of budgeting may not sound like a lot of fun, but it doesn’t have to be a chore that keeps you from enjoying your hard-earned paycheck. Planning a monthly budget helps you control the money coming in and going out. It allows you to prioritize how you spend and save for goals like buying a home, setting up a future college fund for children, and funding your retirement.

Everyone’s budget may be a little different, but two spending categories often consume a large portion of income (especially for younger people early in their careers): housing costs and car expenses. For someone who owns a home, housing costs would include not only a mortgage payment, but also expenses like property taxes and insurance. Someone renting would have the rental cost and any rental insurance.

Consider these general guidelines:

  • A common rule of thumb is that your housing costs should not exceed about 30% of your gross income. In reality, this percentage could be a bit high if you have student loans, or if you want more discretionary income to save and for other spending. Housing costs closer to 20% is ideal.

  • A car payment and other consumer debt, like a credit card payment, can quickly eat into a monthly budget. While you may have unique spending and saving goals, a good guideline is to keep your total housing costs and consumer debt payments all within about 35% of your gross income.

2. Stash Some Cash for Emergencies

We all know that unexpected events may add unplanned expenses or changes to your budget. For example, an expensive car or home repair, a medical bill, or even a temporary loss of income can cause major financial setbacks.

Start setting aside a regular cash reserve or “rainy day” fund for emergencies or even future opportunities. Consider building up to six months’ worth of your most essential expenses. This may seem daunting at first, but make a plan to save this over time (even a few years). Set goals and milestones along the way, such as saving the first $1,000, then one months’ expenses, three months’ expenses, and so on, until you reach your ultimate goal.

3. Build Your Credit and Control Debt

Establishing a good credit history helps you qualify for mortgages and car loans at the favorable interest rates and gets you lower rates on insurance premiums, utilities, or small business loans. Paying your bills on time and limiting the amount of your outstanding debt will go a long way toward building your credit rating. What goes into your credit score? Click here.

  • If you have student loans, plan to pay them down right away. Automated reminders and systematic payments can help keep you organized. To learn how student loans affect your credit score, click here.

  • Use your credit card like a debit card, spending only what you could pay for in cash. Then each month, pay off the accumulated balance.

  • Some credit cards do have great rewards programs, but don’t be tempted to open too many accounts and start filling up those balances. You can easily get overextended and damage your credit.

4. Save Early for the Long Term

Saving for goals like retirement might not seem like a top priority, especially when that could be 30 or 40 years away. Maybe you think you’ll invest for retirement once you pay off your loans, save some cash, or deal with other, more immediate needs. Well, reconsider waiting to start.

In fact, time is your BIG advantage. As an example, let’s say you could put $200 per month in a retirement account, like an employer 401(k), starting at age 25. Assuming a 7% annual return, by age 60 (35 years of saving), you would have just over $360,000. Now, say you waited until age 35 to begin saving. To reach that same $360,000 with 25 years of saving, you would need to more than double your monthly contribution to $445. Starting with even a small amount of savings while tackling other goals can really pay off.

Does your employer offer a company match on your retirement plan? Even better! A typical matching program may offer something like 50 cents for each $1 that you contribute, up to a maximum percentage of your salary (e.g. 6%). So if you contribute up to that 6%, your employer would add an extra 3% of your salary to the plan. This is like getting an immediate 50% return on your contribution. The earlier you can contribute, the more time these matching funds have to compound. 

5. Get a Little More Educated (about money and finances)

Ok, don’t worry. Forming good financial habits doesn’t require an advanced degree or expertise in all money matters. To build your overall knowledge and confidence, spend a little time each week, even just an hour, on an area of your finances and learn about a different topic.

Start with a book or two on general personal finance topics. You can find reference books on specific topics, from mortgages and debt to investments and estate planning. Information offered through news media or internet searches also can provide resources. And you can even find a blog not too far away (Money Centered Blog).

Robert Ingram, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® With more than 15 years of industry experience, he is a trusted source for local media outlets and frequent contributor to The Center’s “Money Centered” blog.

Webinar in Review: College Planning Navigating the Financial Aid Process and the FAFSA

Robert Ingram Contributed by: Robert Ingram

Are you unsure of where to start when it comes to applying for financial aid or what to make of the award letter your child has received? You’re not alone! Many parents are confused about the FAFSA, about what it actually means, or how they will benefit from completing it each year. Throughout this 45-minute webinar, our guest speaker, Carrie Gilchrist, Ph.D., Senior Financial Aid Outreach Advisor at Oakland University will share her insights on why you should always complete the FAFSA and how the information is used to determine financial aid awards. Carrie will also discuss the FAFSA filing deadlines and details, provide advice on steps to consider leading up to starting school, and address how college savings accounts can potentially affect financial aid.

Link to recording: https://www.youtube.com/watch?v=F0yjOqZzYHQ

Check out the time stamps below to listen to the topics you’re most interested in:

  • 4:25: Explanation of the Elements of Financial Aid

  • 5:30: What is the FAFSA, and How to Apply

  • 23:30: FAFSA Processing

  • 28:00 Sources of Financial Aid: Federal Government, State, College & University, Private Sources

  • 38:30: Change in Financial Circumstances

  • 39:30: Your Next Steps

Robert Ingram is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.®


The opinions expressed in the webinar are those of the speaker and not necessarily those of Raymond James Financial Services, Inc. Raymond James is not affiliated with Carrie Gilchrist or Oakland University.

Student Loan Interest Rates Increase for the 2018/2019 School Year

Josh Bitel Contributed by: Josh Bitel

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Stop me if you’ve heard this before, college is expensive. For the second year in a row, rates on federal student loans for students attending college in the fall of 2018 are rising by 0.60%. This is a result of the rise in 10-year Treasury note rates. This rate increase wont effect loans made on or before June 30, 2018. Of course, this only applies to federal loans.

For current students, new loan payments will be slightly higher – to the tune of about two or three dollars per month. However, the bigger hit comes for students enrolling for the first time in the fall. With the combination of rising interest rates and the cost of college sky rocketing every year, repayment of these loans can feel daunting. We are likely to see consistent rate hikes for the foreseeable future which will serve to be a bigger burden down the road.  

These rate hikes stress the importance of reducing your need for loans, if possible. Saving as early as you can is an easy way to do this. Simply put, the more you have saved, the less you will need to borrow for education. Filling out the Free Application for Federal Student Aid (FAFSA) and applying for as many scholarships and grants as you qualify for is a great starting point.

Before applying for loans, you should always know how much you need to borrow, there are numerous student loan affordability calculators available online that can give you a sense of what you need and what you can afford. Bear in mind that you may qualify for more than you need, so fighting the temptation of a little extra spending money (at 6.60% interest) is key.

At any rate it is important to understand key information when signing into a loan. Education costs are steadily rising, and interest rates seem to be headed in the same direction. With a responsible payoff strategy and a little bit of hard work, you can start chipping away at that debt in no time. 

Josh Bitel is a Client Service Associate at Center for Financial Planning, Inc.®


The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Josh Bitel and not necessarily those of Raymond James.