The world is a college grad’s oyster. One of the best ways to prepare them for this new world is to set them up with solid financial guidelines. Here are some key money matters that you should instill in your college grad.
It’s Okay to Build Slowly
One of the first things your college grad should do is set up a budget. Have your adult kid track income and expenses for a few months to learn what money is coming in and where it is going. Once they know their typical spending/saving patterns, they should adjust to save more than they spend. Stress the importance of long term savings and an emergency fund. Make sure they know that it’s okay to build both slowly, so long as they are being steadily stocked.
The Score Matters
Explain the importance of their credit score. The higher the score, the better their financial health. Help them find a solid credit card to open. As USA Today suggests, this card should be used wisely — mostly on items your kid can pay off each month with no problem. Using the card will help them build a good credit history and payment history. Both will get their credit score headed in the right direction.
Make a Loan Plan
Your college grad likely has student loan debt. Make sure they have a plan to address that debt. This is especially important during the six month grace period post-graduation. If they can, have your college grad start payments immediately. If not, use the grace period to craft a repayment plan that works for them.
It’s never too early to think about retirement. If your college grad’s employer has a 401(k), have your kid take full advantage. Stress the importance of grabbing any available matching dollars. If not, help them explore other long term savings options, like a Roth IRA.
Article originally posted by Chris O'Shea on savvymoney.com