By: Pierre Durant
I graduate next week… In fact, I graduate in three days and the feeling is indescribable! There’s a mixture of happiness, anxiety, overwhelming pressure and hopefulness for the future. I can’t help but hope to get a job, enroll into Graduate School, and start a new chapter in my life of independence and self-sufficiency with my finances. So, as I know many other graduates are floating in the same boat of emerging adulthood as me, I thought I would provide a few tips toward making wise financial decisions in the transition from the undergraduate level to the world beyond.
The secret to saving is outlined by Dave Ramsey in his book entitled: The Money Answer Book. He expounds upon the fact that often times people want to save but don’t know how due to the difficulty of delaying gratification. Currently, I am very excited to purchase the PlayStation 4 game system that was just released a few weeks ago. However, I realize that with rent, college loans, and my graduate school application expenses, I simply cannot afford to spend that amount of money and time on a box. It takes an incredible amount of focus and drive to forego things we want for things we need. However, it may take spending less money on popular clothing and shoe releases, fast food outings, and concert tickets. It takes substituting spending that frivolous money for putting ten percent of your pay check in the bank and letting it accrue interest over time to build a safety net of security for the future. As college students it was easy to say, “Hey, I’m in college and I deserve to have a good time! Mom and Dad will spot me a few bucks!” However, as a recent graduate, wouldn’t you like to tell Mom and Dad that they can keep their money for themselves for a change and take the reins in your own financial plan? It will shock them and it will give you a sense of confidence in the fact that you can be in control of your own spending without being completely broke as you were during your previous undergraduate years. I, for one, am ready and willing to begin investing in endeavors that will build passive income and work toward more significant purchases such as my first home, a car, and insurance.
2. How to Manage College Loans
According to the Huffington Post, in 2010 the average college student who used loans to pay off their tuition racked up $25,250 in debt. This can be a scary reality but it makes sense to set up a repayment plan where you can start paying off loans bit by bit in order to make it easier on yourself and your parents. Using deferment or postponing the repayment of your loan’s principal and interest can be an option as well as applying for forbearance. Forbearance can be granted by your loan officer to allow you stop or reduce your monthly payment for up to 12 months. If you are looking into Graduate School, perhaps apply a semester or two later in order to allow yourself time to stack funds to help pay for the experience rather than piling up more debt. Working two or three jobs while you have the youth and energy to do so may be necessary in order to use one or two alternate streams of income to allocate specifically for a designated task such as paying off loans, credit card debt, or a car payment. Being in the mentality that your hustle is a temporary solution to avoid debt in the future can be motivation enough to drive you to work every day.
3. How to Use Credit Efficiently
Only use credit for expenditures that you can pay off rather quickly. Now I was raised in fear of using credit cards in any way because my parents advised me that it is a dangerous habit to “charge it” for clothing, food, and other daily impulses that college students are often plagued with. I have no department store cards of any type because my folks scared me into never using them. However, upon the beginning of my junior year I went ahead and registered for my first credit card. I figured I was mature enough to handle a credit card and use it only for important purchases and emergencies. Through Wells Fargo, there is a student credit card with a small available credit limit meant to build credit for young adults who do not currently have any. The credit card’s purpose is only for school-related purchases and that was strictly what I intended to use it for. In fact, I didn’t even use it for the first year that I had it. But during my last semester as an undergraduate I used it for textbooks I needed for that semester only and since I had worked all summer, I was able to pay it all off immediately. This way I could build credit without getting too backed up to the point where I couldn’t pay off the bill. I am currently using my credit card to pay for Graduate School expenses such as applications, the GRE, and sending off my transcripts. Upon graduation on December 19th, I plan to use my gifts and Christmas funds to pay off my credit card balance.
4. How to stick to a budget
Write everything down! When I was a child, my father made me a chart and told me to write down every amount that I earned cutting grass, babysitting, and for allowance. Before I spent a cent, I took one-tenth of however much I earned and put it into my savings and another tenth went to the church as tithes. Then in another column, I would write how much I spent on various childhood expenses. I was also taught to spend money on my needs before my wants as well. This helped me track where my money went. I have recently stopped using that method but I am going to re-adopt this practice. When you dictate where your money goes rather than watching it flow out on its own, then you control how much you spend. Take your monthly earnings and separate out different categories of average expenditures such as bills, groceries, savings, loan repayments, and activities. Make sure you only spend your predetermined amount of money on that category and once you’ve spent it don’t spend any more. This will ensure that you stick to your plan without going over and having to dip into savings or emergency funds. Over time, with advancement in your career as well as additions in salary and income, you can increase your pre-determined amount to allow for extra spending where necessary.
5. Financial Counseling Before Marriage
I am not writing this simply because my career goal is to become a counselor. I know that for many rising college graduates this time of their life features a deepening of their relationships and for many couples poor money management is a deal breaker. Therefore, it is very useful for partners to be on the same page financially. Just bringing various fiscal issues to the surface can provide methods to make the partnership even more successful. The budget for the wedding itself can be the basis for a disagreement if it is not discussed beforehand. Therefore, it is wise to consult someone with experience in matters of fiscal responsibility. Drafting a practice budget as an engaged couple can be completely different than budgeting for an individual so making sure that bills and needs are taken care of before indulgences can be a necessary discussion to have before entering into a covenant. Keeping your other half accountable for responsible spending habits and reversing harmful ones can avoid a large discrepancy in credit scores between the two of you in your marriage, if that is in the plan for your relationship. Financial issues are among the top reasons why marriages fail, so solidifying the unity between two people regarding their spending can be an effective way to avoid a premature divorce or lapse in romance.
Ramsey, D. (2004). The Money Answer Book. Nashville, TN: Thomas Nelson, Inc.
Pope, J. (2011). Average Student Loan Debt: $25,250. Huffington Post. Retrieved from
Federal Student Aid: An Office of the U.S. Department of Education. Retrieved from