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Career Tip: Finances After Graduation

According to the National Association of Colleges and Employers (NACE), students graduating with bachelor degrees are expected to earn roughly $31,000 a year in 2007.  Give Uncle Sam 15% for taxes and pay 10% for insurance…divide by 12…and your bring home pay is around $1,930 a month.  You can live on that, right?!?!?!  It may be more difficult than you think!  For college graduates the realities of having “a real job” sink in quickly…especially in the bank account.  Here are some tips on how not to make financial mistakes early in your “real world” career.

WELL, BOB…IT’S A NEW CAR!! – I know you have been driving “The Blue Thunder” since high school, but be wary of catching the new car bug!  If your current vehicle is dependable, stick it out for a few months till you can save a down payment.  Also, no matter what he says, “Stan Stan the New Car Man” is NOT your friend.  He is out to make a sale! Don’t let him talk you into a NEW car.  They really do depreciate the moment you drive off the lot.  A good used car will be a much better investment. Finally, as you are negotiating monthly payments, be sure to budget at least $100 for insurance. 

HOME SWEET HOME! – Before you decide to buy a house, ask yourself how long you plan to be there.  3 years or less – realtors say you may be better off renting.  If you plan to be there for a while, the real estate game is less about what you make and more about what you save.  A hefty down payment can save you thousands in the long run.  Also, there are lots of hidden fees in the home buying process…everyone is out to make money - the seller, the realtor, the mortgage company, etc.  You have the final say.  Once you have signed on the dotted line, the purchase is YOURS!  There is no calling the landlord when the heating goes out or the plumbing leaks.  Be sure to budget for emergency repairs…and home improvements, as well.  No house is “move-in ready!”

PAYING FOR SCHOOL, AFTER SCHOOL! – You have lived like a king/queen for 4 years on student loans…now…you’ve been cut off and they want their money back!!  Loans seem like quick cash for most students, but remember that they must be REPAID!  Most governmental loan programs will give you a 6 month grace period to get a job and get settled.  After that, you will be expected to make monthly payments. Make sure that you know what you owe and to whom.  The good folks over in Financial Aid will be able to help with this (visit them online at /pages/228.asp or call 662.846.4670).  If you are having trouble making ends meet, most governmental programs won’t send “Guido” and “Fists” out right away.  Keep in contact with your lenders.  They will usually help you work something out. 

I’M THINKING OF A NUMBER… - You’re right!  It is your credit score.  In kindergarten, you received grades on things like “Sharing,” “Follows instructions,” or “Plays well with others.”  Your credit rating is your grade in “Will re-pay money borrowed.”  It is important to know that everything you finance or borrow will affect your score: late/missed credit card payments, number of credit cards issued, amount of money borrowed, etc.  Protect this number with your life!!  A good credit score can result in lower monthly payments and lower interest rates. 

PLASTIC PARADISE – Old Navy, Macy’s, The Gap, J. Crew, Victoria Secrets, Banana Republic…no…this isn’t a list of stores in my favorite mall…it is a list of the store charge cards my friend *Lisa has in her wallet (* name has been changed to protect the innocent…but you know who you are!!).  Credit cards are very tempting…especially since college students get an application in the mail almost daily.  My best advice…DON’T DO IT!!  If you do decide to look Medusa in the eye…be smart.  Credit and store charge cards’ interest rates can range from 9%-25%, and many carry “annual fees.”  If you are in the market for a card, look for the lowest rate and no fee…and limit yourself to ONE card!!  Multiple cards show up unfavorably on your credit report.  Try to keep a $0 balance from month to month by applying this rule…”if I don’t have the $$ in my account to purchase it, I shouldn’t buy it.”  Easier said than done…trust me…my 1^st born child will be paid immediately to Discover Card.  And in the day of identity theft, take some extra time to SHREAD credit card offers.  A morning news program recently reported a credit card company approving a ripped and taped application. 

Cashing your 1^st real pay check will make you feel like Donald Trump…but be cautious with your funds!  You will soon see why your dad always said “money doesn’t grow on trees.” Developing a budget that you can stick to is the key to financial piece of mind.  For more information on finances after graduation, stop by the Career Center. 

Source: Jason Umfress, 2006