Graduation is a big milestone. Whether you are onto your first job out of school or preparing to financially support your way through college, handling your money on your own for the first time can be intimidating. Here are four financial avenues to help find your way as a new graduate.
Open Your First Credit Card
A credit card brings independence and convenience for your everyday expenses. Search for nearby financial institutions online and review their credit card options as well as any spending benefits that come with it, such as cashback on purchases. If handled correctly, a credit card will help you establish a credit score, providing proof you are financially responsible to lenders. As long as you are paying off your credit card balance on time and in full each month, your credit score will rise, which will help you make bigger purchases in the future, like a new car or home.
50-30-20 Rule
After you’ve established a source of income, the 50-30-20 rule (50% of your income for needs, 30% for wants, and 20% for saving, debt or investing) is a good place to start. Some financial situations will differ in their approach from others (i.e. higher debt payments or lower cost of needs) but this rule allows you to break down your money decisions into short term and long term parts regardless of the amount of income. At the core, you’ll stay organized with your money and have answers to questions like, “What are my financial inputs and outputs?”
Review Your Health Insurance Plan
If you are enrolled in your parent or guardian’s health plan or thinking about starting your own plan, understanding your health insurance options is crucial not only to your financial well-being, but your physical well-being. Consider the following benefits as a place to start.
High Deductible Health Plan:
- Occasional doctor visits
- Lower monthly premium (cost of health care coverage)
- Tax advantages with a Health Savings Account
Low Deductible Health Plan:
- Consistent doctor visits
- Higher monthly premium
- More predictable expenses
A deductible is an expense an individual pays out of pocket (no financial assistance) before an insurance provider or tax authority pays any amount.
Staying on top of your finances could help you develop good habits and improve your overall financial well-being. You’ll learn about your spending patterns, stay on track with your savings goals, and even help keep your identity secure by catching unknown charges to your account.
Not sure your finances are in the right place? Schedule an appointment with a Cinfed Financial Coach at your nearest branch location.