You are a Recent College Graduate, Have a Job and Now What?

Plan your financial future after college, through your twenties and beyond.

By Pete Glocker

DMCC

A new car is the first purchase most college graduates want to make directly after graduation. You may ask yourself, what is the matter with being rewarded with something nice after completing such a hard task that you have been working towards your whole life? Depending on what your entry-level job pays it would be wise to spend accordingly with your available income. Many graduates think they are getting better paying jobs than they actually get after college, so they purchase a vehicle way out of their price range. “I know when I graduate in December, it will be nice to get a new car, but I know there will be student loans and other living expenses to pay off first," says Jayne Santucci, a senior at Florida Atlantic University. “When recent college graduates get their first job, they see their co-workers with brand new cars, so they think they should get one also, not knowing the co-workers experience and salary," Santucci adds.

If you are going into a career that coincides with your college major, you may want to consider starting with an entry level position rather than taking a higher paying job in an unrelated field. The entry level job will be better for you in the long run because it will give you more opportunities to advance in a field that you were trained in. If you start with a higher paid job in a different career, you might lose interest quickly and have little room for advancement. Stick with your career, and the money will eventually come.

When you get hired for your first job in the “real world," find out what kinds of retirement plans are available. The majority of employers offer 401(k) plans or other tax-deferred retirement options. With every paycheck you receive, you can contribute money into the 401(k) and many employers will match some part of your contribution. This will help you save for your future. Start your savings account immediately and if at all possible have your money directly deposited into your account. Learn to pay yourself first!

According to CNN Money, college graduates of 2005 are being paid more in starting salaries than the class of 2003-2004. Here is a list of the average salaries for college graduates.

Source: CNN Money 2005

After obtaining their landing your first job, many college graduates think it may be a good idea to move back home with their parents so they can save money. Saving money is not always the case when moving home. Having the feeling of fewer bills can provide you more freedom for going out and buying an expensive car, stereo or designer clothes. So, instead of saving your money, graduates could be spending it on items they do not really need. It might be a smarter idea to actually stay independent because you will grow and may learn faster what it means to be self-reliant. As a college graduate, you may struggle starting out at first, but it will be beneficial to you in the long run.

The most important word to you, a recent college graduate, should be “b-u-d-g-e-t." By creating a budget, it will give you the opportunity to design a method to pay your bills and save for something you really want. The better you are at sticking to a budget, the more peace of mind you will have when it comes to your personal finances.

A person’s twenties could be the most important years to start achieving your financial goals. The earlier you invest the better. If a 25-year-old who invests $2,000 a year at a 6 percent compound interest annually for fifteen years and never invests another dollar, after the age of 40, the 25-year-old will earn more by the age of 65 than a 35-year-old who invests $2,000 a year at 6 percent compound interest annually for 30 years, even though the 35-year-old would have invested twice as long.

Last but not least, it is important to identify a short, medium and long-term goal for yourself. A short-term goal may be a new car, a vacation or a television. A medium-term goal could be buying a business, a house or paying for your child’s education. A long-term goal can be retirement and traveling.

Managing money as a young adult can be the most important in terms of your financial situation. It is best to do research and want to learn about how to manage your credit, bills, and any extra expenditure before it is too late. Be smart with your money.

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