Seven Financial Tips for New Grads


Any recent graduate may feel like he or she has hit the jackpot by landing a job right out of school, especially in today's job market. While a new office job likely pays more than a gig in college, that doesn't mean you can be carefree with your finances.

Jesse Ryan, managing director at Accounting Principals says it is common for those just out of school to feel they are making a lot of money, but creating a smart budget from the start is essential to creating a healthy financial lifestyle.

"That gross number may seem huge," he says of salaries, "but figure out the net take home. List out every expense you have."

When creating a budget, Ryan suggests students work with their parents, loan companies and employer benefits to help determine the best savings approach. "Look at things within that budget, they all work in conjunction with one another," he said.

Here are some of Ryan's tips for spending smart as a new grad:

Consolidate your student loans. Government consolidation combines all student loans into one monthly payment, which gives you a lower interest rate and may even lower monthly payments, according to Ryan. He also suggests grads that don't have a job immediately after graduation request a six-month deferment on their loans.

Cut back on small expenses. Going out to eat frequently or making frequent trips to the mall really add up and can be draining on a budget. "Look at things in your budget and figure out what other items you can factor in there," says Ryan.

Build an emergency safety net. Once you find a job, start saving between three and six months of living expenses in an emergency fund. "Figure out every expense you have: student loans, small expenses and then the safety net."

Pick the right bank. Evaluate different banks to identify which one offers the best options for your lifestyle, including free checking, direct deposit and convenient locations.

Avoid credit pitfalls. Stay away from relying on credit when you are just out of school. Ryan suggests working off a cash budget to prevent overspending. "It's tangible cash, rather than credit," he said. "You want to work off of a cash basis."

Be careful with taxes. Filling out a W-4 form can be confusing, so make sure you are choosing the right  withholding option to avoid owing money when tax season rolls around.

Go over your benefits, carefully. If you have a job, make sure you fully understand and take advantage of the companys benefits.  Taking out pre-tax money for commuting and health coverage can save money in the end. Also, enroll in a 401(k) savings plan, especially if your employer offers matching contributions. "Your company is paying good money for these benefits, so you have to take advantage of them.