We asked financial experts to share their advice for the first money moves to make now that you’ve gotten your degree. As much as graduating can feel like being shot out of a cannon into a whole new world, these guidelines can help you feel more in control of your financial future. “Now that you may be earning a steady stream of income, using the 50/30/20 rule can help make it easy to budget and set financial goals,” explains Manny Chagas, chief operating officer at financial technology platform Oppfi and former vice president of Discover Student Loans. Here’s how it works. According to Chagas, 50 percent of your income should go to necessities, such as housing, groceries, transportation, and/or paying down your student loans. “If this is your first time being financially independent, know that you’ll be juggling a lot of other costs, but it is still important to continue paying down debt so it doesn’t impact future financial goals,” he says. After divvying up your necessities, 30 percent of your income should go toward “wants” such as entertainment, dining out, or subscriptions. And finally, the last 20 percent can go toward financial goals and planning for your future, which could include a retirement plan, emergency fund, or a health savings account, says Chagas. If there’s any leftover money, Chagas recommends the excess be used to make extra payments on credit cards, student loans, or other debts. “Starting off the new and exciting post-grad chapter of your life with good financial habits, like budgeting, is key to setting yourself up to tackle your next goals,” he adds. Experts commonly recommend three to six months of savings in an emergency fund for living expenses as a safety net if you encounter a job loss, medical crisis, or another economic setback. “As you experience your first paycheck, you’ll have an idea how much money you need on a monthly basis,” says Ian Sells, CEO of RebateKey. The best approach is to set aside an allotment from each paycheck so you build up your emergency fund. If you don’t have a job with a consistent income lined up, you can still follow the 50/30/20 budget by calculating how much money you make, on average, each month, and how much money you need to allot to each category of expenses. First, determine how much you’ll need to pay each month to keep your loan account in good standing. If the monthly bill for your federal student debt doesn’t fit into your budget, Tayne says you can apply for an income-driven repayment plan. “Your required payment could be as low as $0,” she says. “Contact your lender right away if you think you’ll struggle to pay your private student loans.” While private loans offer fewer protections than federal loans, your servicer may be able to provide you with a deferment or forbearance to postpone payments. Beyond making the minimum payment each month, Tayne also says you should figure out how to put additional money towards your debt, if possible. “Consider applying windfalls like tax refunds, bonuses at work, or cash gifts to your balance,” she says. “You could also get a part-time job or start a side hustle to earn more income you can use to reduce your debt. That way, you can be free of the burden and pursue other financial goals sooner.” It’s also a good idea to research your repayment assistance and loan forgiveness options. For example, Tayne explains that your employer may offer student loan repayment assistance as an employee benefit. Plus, if you work full-time for the government or a non-profit and make qualifying loan payments for 10 years, Tayne says you may be eligible to have your remaining debt wiped away through the Public Service Loan Forgiveness program. RELATED: 15 Companies That Will Pay Off Your Student Loans McKay says one way to establish credit is to apply for a credit card with a low credit limit, use it regularly, and pay it off each month. “If you have existing credit card or student loan debt, make sure that you pay the minimum amount due each month—at the very least—and on time,” she stresses. If you follow the golden rule of paying your monthly balance in full and on time each month, this positive credit history will be reported to credit bureaus which will favorably impact your credit score and credit rating. As a best practice, McKay recommends requesting your free credit report once a year from one of the three major credit bureau agencies to help keep track of your credit score and address any issues or discrepancies that may adversely affect your credit.
