Finance Tips to Share With the Grads in Your Life

Finance tips to empower recent graduates

College graduation is a time for celebrating accomplishments and looking forward to the future. After years of pulling all-nighters in the library, cramming for final exams and searching for careers, the culmination has finally arrived.

Transitioning from student life to the workforce will bring new challenges, but it also opens doors to financial freedom. Here are four empowering steps to help you start managing your finances confidently.

Understand how to manage student debt

Fact: According to the Education Data Initiative, the average federal student loan debt for borrowers who complete a bachelor’s degree is over $30,000 and steadily increasing. Student loan monthly payments average between $200-$299 a month, reflecting the growing cost of higher education and the reality many new grads face as they begin their careers.

The good news: You have options. Federal loans typically include a six-month grace period after graduation, allowing you time to get settled before making payments. Depending on your circumstances, additional deferments or repayment plans may be available. You can find up-to-date information about repayment options on the Federal Student Aid website.

Tips for preparing to repay student loans

• Research repayment options, including income-based repayment plans before your grace period ends.
• Consider setting up auto pay on your loans to avoid missing deadlines.
• This six-minute, interactive KEYS® Online module about student loans gives a top-to-bottom explanation on how to manage debt postgrad.

Build your creditworthiness

Fact: Maintaining a good credit score is one of the best ways to set up for financial success. Many young people know this but aren’t quite sure where to start.

The good news: It’s easier to build credit than you think. Some graduates might be renting their own place, buying a car or getting a credit card for the first time. These are all great ways to boost creditworthiness as long as they pay their bills consistently and on time. Pro tip: Set up auto pay and never miss a payment.

Credit resources to set you up for success:

• Read our “Top credit questions answered” article for more on how credit scores are calculated and tips for improving your score.
• Become a credit pro in five minutes with this KEYS Online Credit Scores and Reports Module.
• Check out our current offers if you (or the grad you know) are in the market for that new car.

Learn how taxes work

Fact: For many, a postgrad job means filing taxes independently and maybe for the first time.

The good news: With a little preparation, filing taxes can be straightforward. Staying organized and gathering documents ahead of time makes the process a lot less overwhelming.

Tips for first-time filers

• Keep a digital or physical folder of all important financial paperwork throughout the year, including proof of income (such as your W-2), charitable donations and student loan interest paid. That way, when it’s time to file, you aren’t digging through stacks of paper or frantically searching your emails.
• Be aware of tax deductions and credits for which you may qualify, like education-related expenses. Also, if you earn income through freelance, gig or contract work, you may need to make estimated tax payments throughout the year instead of filing once annually.
• Research ways to file online for free or at a low cost.

For an overview of tax basics, explore this interactive KEYS Online Taxes: The Basic Module. Just know you may need to consult a tax professional about which forms are required, based on your financial situation.

Make Saving Part of Your Routine

Fact: Saving money is one of the most important habits for young adults to develop. But if they’ve never saved before or don’t have any particular financial goals in mind, it can be hard to know where to start.

The good news: Saving is kind of like working out; you don’t have to be an expert, you just need to get started. Our KEYS Online Savings Accounts Module recommends stashing 20% of each paycheck, but any amount of saving is a step in the right direction. Even starting with $10 per week can help you save more than $500 a year.

Tips for saving money as a new grad

• Follow the “50-30-20 rule”: allocate 50% of income to necessities, 30% to discretionary spending and 20% to savings.
• Open a dedicated savings account to avoid spending money you intend to save. The money saved can go toward short-term goals like attending a friend’s destination wedding or long-term goals like buying a house. As saving becomes more of a habit, consider increasing the amount you set aside or start an emergency fund.
• This five-minute KEYS Online Healthy Financial Habits Module breaks down the fundamentals of savings and money management. It’s a great starter course for getting your finances on the right track.

Congratulations to all the recent graduates out there! Celebrate where you are today while planning where you’ll go tomorrow. For more young adult finance tips, read these Money Tips for Beginners or take a page out of this Money Management Playbook.

By Taylor Provost

GM Financial