Congratulations! Your hard work and support have paid off—your child has landed their first full-time job out of college. As they step into a new world of financial independence, it can feel overwhelming to navigate unfamiliar terrain. To make the transition smoother, here’s a post-grad checklist to help them establish strong financial habits and set themselves up for success.
Step 1: Organize Finances
Compile a List of All Accounts: Encourage your graduate to gather all their financial accounts in one place. This can include checking accounts, savings, credit cards, loans, and more. Looking for a place to store all their accounts in one easy to find spot?
Calculate Net Worth: Add up total assets and subtract liabilities to determine their starting financial position.
Create a Budget: A budget ensures they’re spending less than they earn.
Add up income sources (e.g., salary, hourly wages) and subtract expenses.
For the first few months, track spending manually to understand where the money goes—it’s often more than expected!
Step 2: Build Savings
Start Saving: Set a goal to save 10% of income and gradually increase to 20%. Focus on two key areas:
Emergency Fund: Save 3–6 months’ worth of living expenses in a high-yield savings account.
Retirement: Take advantage of employer-sponsored retirement plans, such as a 401(k), and maximize any matching contributions. Opening an Individual Retirement Account (IRA) is another great option.
Tackle Debt: Making only minimum payments can lead to extended repayment periods and increased interest costs. Prioritizing high-interest debt frees funds faster, allowing for more savings opportunities.
Step 3: Plan Major Expenses
Housing: If moving, consider one-time costs and how rent or mortgage payments will fit into the budget.
Insurance Needs:
Renters Insurance: Renters insurance is a relatively low cost way to protect your personal items.
Health Insurance: Decide whether to stay on a parent’s plan or switch to an employer-provided plan.
Auto Insurance: Determine whether to get an individual policy.
Big Purchases: When planning to buy a car or other expensive item, calculate the total cost and determine how much needs to be saved each month. This creates a clear timeline for reaching the goal by a specific date.
Phone Plan: Evaluate whether to stay on a family plan or switch to an independent plan.
Step 4: Stay Consistent
Set a Financial Check-In Day: Choose a specific day, such as payday, to review financial standing. This can include:
Recording all expenses.
Ensuring savings goals are on track.
Reassessing and updating financial goals as needed.
With these steps, your graduate can feel more confident navigating their new responsibilities and set themselves up for success.
Looking for more personalized guidance? Reach out to us directly to schedule a meeting or to ask a question here: https://www.ritterdaniher.com/contact