This is the time of year for graduations. Graduating from college represents a new phase in life. With any new phase in life, there are changes that need to made in our financial lives, graduating from school is the beginning of most of our financial lives. And, for all of us, it’s always good to revisit the basics of being financially prepared every so often.
One thing we all have in common, is that for the most part, we didn’t learn about money in school. Between paying down that college debt and simply making rent at the start of the month, determining how and where to take control of a financial life isn’t exactly covered in Marine Bio. And for some of us, we may still not feel in control of our financial lives.
The following four financial hacks will help your new graduate kickoff a lifetime of financial readiness and help you maintain your own financial preparedness. Following my four simple financial life changers:
- Actually read documents. Prior to signing any financial documents, read carefully, and importantly, be sure that what you think is covered is actually covered. For example, renters insurance policies do not cover floods. Floods are covered under their own policy.
- Watch your debt -- and avoid consolidation. Be wary of college debt consolidation loans. A debt consolidation loan is actually a refinanced loan with an extended repayment period, which means it will take longer to pay off your debt, and it does not mean that your outstanding debt amount is reduced.
- Make a plan before acting. As life requires major purchases, always plan first. Start by considering what your goals and priorities are.This includes paying off college loans, saving for retirement, buying a home and taking a vacation. Write them down, and keep it somewhere as a guide-star.
- Tackle one thing at a time. Keep it simple. Once you know what is the most important goal for you - do it, but don’t overload. Take on one financial ambition at a time. Don’t set up a retirement fund, apply for two credit cards and book a trip to Aruba in the same day. While random bursts of energy may help you accomplish specific projects such as writing that term paper or turning in a report at work, it’s best to make clear, purposeful and well-informed financial decisions, slowly.
If you are in the college planning stages, you’re faced with the question of saving for retirement and saving for retirement. It is possible to do both. Read this if you are Juggling the Costs of Retirement vs. College. And here’s How to Invest Money for Your Kid’s College Today. Having a qualified financial advisor can help you make more informed decisions that will best fit into your overall financial plan.
Here’s some resources for those who have college students in the family (or are working with clients who have children in college):
- Your first stop should be the careeronestop website sponsored by the U.S. Department of Labor which allows you to search more than 8,000 scholarships, fellowships, grants, and other financial aid award opportunities.
- Another site that you should have on your list is College Scorecard from the U.S. Department of Education. You can compare schools based on programs/degrees, location, size and other factors. There are tools and resources on understanding types of financial aid, calculating your aid, starting your FAFSA and GI Bill Benefits.
- There’s good news for college students and parents who plan to take out loans to help pay for school. Interest rates on federal student loans are dropping for the 2019-2020 academic year, the first decline in two years.See: Borrowing for College Just Got a Little Less Expensive.
- There are also ways to protect your investment in higher education through tuition insurance or renters insurance. Colleges and universities may have their own program or you may be able to add a renters policy through your own insurance company. And be sure to check out GradGuard which works with over 300 colleges and universities (click here). Please note that I have no relationship with Gradguard.
For those who have graduated from college or are carrying their own college debt, you’ll need to decide how to approach paying it off. Be sure to carefully consider all of your options especially if you considering making any changes. Loans backed by the federal government allow you to use income based repayment plans which can reduce your loan payments. For more:
- Should You Pay Down Debt or Save for Retirement? It depends on your your goals, priorities and specifics of your situations.
- To help you weight the option of whether to Pay Off Student Loans or Invest? 6 Questions to Help You Decide
Why GET READY! ?
One of the reasons why I wrote GET READY! was to help promote financial preparedness. GET READY! Is the perfect gift for a college graduate, newlywed or anyone looking to organize their financial life. You can pick up GET READY! from Amazon (here)
Here’s what one reviewer had to say: This is what we should be teaching our children at the beginning of their financial lives: I wish I had had a copy of this book several decades ago! At the time I am reading it I am entering my retirement phase (or dreams.) This book is what we should be teaching our children at the beginning of their financial lives. It covers so many topics that most people find difficult to understand or retain their understanding of. Even if you don't learn everything from this book you will learn intelligent questions to ask your own financial advisers. In an oversized format, there is room to enter your information directly into this book or to easily make copies and prepare your own Get Ready binder. I appreciated the comparisons made to other kits one prepares for emergency use or prevention. From bank accounts and insurance policies to subscriptions that automatically renew and other aspects of financial life that don't get the regular attention they require, this book covers more than any other I have read. I think I need additional copies for family members. Using easily understood language, this book explains what you need to do and why. The layout and format make sense. Tony Steuer clearly knows his topic.