A recent MagnifyMoney.com national survey of over 1,000 millennials who graduated college between 2011 and 2014 revealed their biggest financial regrets:
- Not saving enough: 31%
- Not learning personal finance in school: 26%
- Not being more careful about loans and debt: 23%
- Not establishing credit sooner: 19%
- Getting hit with fees: 12%
- Missing payments: 10%
- Other: 5%
We’ve used the top four regrets to create a financial checklist tailored to current college graduates. Hopefully, the mistakes of your older peers can help provide a guide towards financial health starting right now!
MagnifyMoney’s Financial Checklist for College Graduates
We encourage you to keep this calculation and goal in mind when making your early money choices right out of school:
Calculation: [How much are you making per month] – [student loan payment] = what you have to spend on other expenses (ie: rent, car, saving for retirement)
Goal: Keep your fixed expenses (student loan payment, rent, cost of transportation) under 50% of your monthly take home pay
1. Not Saving Enough
- Establish a savings account (preferably one with at least 1.00% APY)
- Automate a portion of each paycheck to go right into savings
- Do you have an employer matched retirement account [401(k) or 403(b)]?
- Contribute at least enough each paycheck to get the match
- If you can afford more, go up to 15%
- No employer sponsored retirement account or self-employed?
- Contribute to an IRA or SEP-IRA for self-employed (either traditional or Roth) each year
2. Not Handling Student Loans Carefully
Step 1: Find and list all loans (Federal and Private) which lenders own them
- Tip: Use NSLDS to keep track of Federal loans. A credit report can be a good starting place to track private lenders.
Step 2: Determine how much are your monthly payments?
Step 3: When will your first payment be due
- Sign up for programs based on your eligibility
Step 5: Look into refinance options if you’re willing to give up the federal protections (forgiveness and income-based repayment plans) or Federal loan consolidation options (tip: be sure to check if you’d still be giving up protections)
Step 6: Automate payments on loans once grace period ends
Goal: Use student loan monthly payment to determine how much you can afford to pay on the rest of your monthly expenses (ie: rent and car payment).
3. Not Learning About Personal Finance in School
Understand these basics
- Set financial goals
- A strong credit score will help keep the rest of your financial life less expensive
- Budgeting is an important tool. Understand the inflow and outflow of your cash and only spend what you can afford
- Compound interest will be your best friend or worst enemy.
- Don’t be afraid to invest, but avoid being emotional and yanking money out when the market takes a downturn
- Credit card debt is never financially healthy nor necessary
- Develop the saving habit early and practice it monthly
Read these books and websites:
- Personal Finance in Your 20s for Dummies
- The One-Page Financial Plan by Carl Richards
- The One Week Budget by Tiffany “The Budgetnista” Aliche
- Yahoo! Finance’s Mandi Woodruff
- I Will Teach You to Be Rich
Listen to these podcasts:
Not all these styles of delivering money knowledge will appeal to you. The trick is to find one that stimulates your desire to learn more about finance, take control of debt and feel empowered by money.
- Stacking Benjamins
- Planet Money
- The Clark Howard Show
- Dave Ramsey
- You Need a Budget
- Marketplace Money
- Listen Money Matters
- So Money
4. Not Establishing Credit
Step 1: Get a credit card
Step 2: Make monthly purchases of no more than 20% of your total available credit limit
Step 3: Pay off your card on time and in full each month
Can’t get a regular credit card?
- Get a secured card, which will require you put down a deposit (between $50 – $200 depending on the card).
- Repeat the same steps as with a regular credit card and you’ll build your score to 680+ and be eligible for an unsecured credit card.
Deal with any negative information
- Bring any outstanding accounts current
- Deal with items in collections [Go here for more information]
- Continue pumping positive information on to your credit report by using your credit card responsibly
Understanding your credit report
- A credit score is based off information on your credit report, so it’s important to ensure your report is accurate
- Once a year, you can download your credit report from each of the 3 credit bureaus (Experian, Equifax, TransUnion) by going to annualcreditreport.com
- You can track your credit score for free by using on of these sites or credit cards
Don’t Be Afraid to Ask for Help
Money may still be a taboo topic for many, but the only way to get reliable help is to just ask! Don’t let fear or shame keep you in debt. You can always reach out to us by emailing [email protected]