How to Finance Life After College

Last Updated on January 26, 2024

As a recent graduate or young professional, there’s one thing you likely have in common with your competition: student debt. 70% of college students graduate with student loans that total an average of about $37,172 that’s owed. However, between working to perfect your resume, gain the right experience, and pay off your student loans, it’s also important to get a handle on proper finance skills that will help propel you to success and make life easier.

Student loan debt in the United States has reached alarming levels, with statistics indicating a staggering burden on graduates. The total outstanding student loan debt surpassed $1.76 trillion, affecting over 43.4 million borrowers.

Overview

• Explore Student Loan Repayment Options: Research different repayment plans and consider refinancing options.
• Create a Budget: Track your expenses and prioritize your spending to manage your finances effectively.
• Find Employment: Look for job opportunities that align with your career goals and provide a stable income.
• Seek Financial Assistance: Explore grants, scholarships, and financial aid programs to reduce your financial burden.
• Start Saving: Develop a savings habit early on and set aside a portion of your income for emergencies and future goals.
• Consider Side Hustles: Supplement your income by taking on part-time jobs or freelance work.
• Live Within Your Means: Avoid unnecessary expenses and adopt a frugal lifestyle to manage your finances responsibly.
• Build Credit: Establish a good credit history by paying bills on time and using credit responsibly.
• Explore Loan Forgiveness Programs: Investigate if you qualify for loan forgiveness programs based on your profession or income level.
• Seek Financial Advice: Consult with a financial advisor to create a personalized plan for managing your post-college finances.

Pencil Out a Budget Now

When preparing for life after college, applying a common financial planning method can be highly beneficial. Start by setting short-term goals and assessing the cost of each objective. Extend this approach to plan your first year after graduation, considering even the smallest expenses. By thoroughly understanding the financial requirements in each aspect, you can strategically allocate your budget and plan effectively.

Avoid Taking on More Risk

While managing existing student funding and debts, it’s crucial to avoid further risks. Plan wisely to utilize your current savings and avoid incurring additional debt. Decreasing your debt-to-income ratio is vital for long-term financial success. Implement the 50-30-20 rule: allocate 50% of your income to necessities, 20% to financial goals, and 30% to discretionary spending. Set yourself up for a secure future in the next stage of your career.

Learn the Basics of Investing

As you begin to reduce your debt and increase your savings throughout your early career, it becomes essential to learn how to invest your money effectively. Investing provides an avenue to save for rainy days, achieve long-term financial goals, and seize larger investment opportunities. To embark on this journey, take the time to familiarize yourself with different investment options.

Dive into the world of mutual and index funds, understanding their unique characteristics and potential returns. Mutual funds allow you to pool your money with other investors and gain access to a diversified portfolio managed by professionals. On the other hand, index funds track specific market indices, offering a passive approach with lower fees. Alongside traditional investment methods, consider exploring robo-investing apps that provide low-risk, automated investment solutions. These apps utilize algorithms to recommend and manage investments based on your risk tolerance and financial goals.

By diversifying your investments and harnessing the power of compounding returns, you can craft a well-rounded investment portfolio. Keep in mind that investing is a long-term commitment, and it’s important to regularly review and adjust your portfolio as your financial situation evolves. With careful planning, education, and the assistance of technology, you can embark on a journey towards financial independence and security.

“Most people won’t invest because they’re afraid they’ll lose their investment. We’ve all lived through dramatic market crashes. As a result, there is nothing we get asked more than “Is now the best time to invest or should I wait?”. Just like everyone else, we can’t predict the future.” – Learn how to invest your money

Take it One Step at a Time

Life as a recent graduate doesn’t have to be as daunting as it may seem. Mastering the art of budgeting your savings during this transition period will provide you with financial stability until you reach a point where you can tackle student loans and pursue exciting opportunities to enrich your professional and personal life. By taking control of your finances early on, you can pave the way for a brighter future and confidently navigate the post-graduate journey.

Budgeting 101: From Getting Out of Debt and Tracking Expenses

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This clear and simple guide provides tons of practical advice for keeping track of your finances. With useful tips on setting financial goals, reducing debt, finding ways to save money, and creating and following a budget plan, you’ll have your dollars and cents under control in no time.

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07/14/2025 01:05 pm GMT