Now that college graduation is over, hopefully students have landed that new job and are starting to get settled in.
Our financial resource Carl Carlson, CEO of Carlson Financial, spoke with us about how to handle money issues.
Here are his 7 financial tips for new college grads:
- At a minimum contribute enough to your 401(k) to get the full match. That’s usually around 6% of your salary and you may get half or all of that number matched by your company. Ideally start at 20%.
- Start working a simple budget: 20/30/50
- 20: Savings
- 30: Travel, entertainment, eating out
- 50: Fixed Expenses: Groceries, gas, rent, utilities, insurances, debt payments, etc.
- Start making payments on student loans
- Establish a "Financially Free Plan"
- Find a Fiduciary Financial Advisor to begin getting all of your insurances in place, better help coordinate all your new work benefits, begin working on investing basics and assist you in getting your financial plan built and off the ground and flying.
- Begin tracking and managing your credit score
- Plan out your money priorities for current income and any increase in income
- Get basic emergency fund of $1,000
- Build emergency fund to 6 months pay
- Get 401(k) contribution up to 20%
- Pay off debts
- Save for a house
In case you don't know what the Financially Free Plan is, that is mentioned in step 4. Carlson said at this young age, he wouldn’t be thinking about retirement; he believes the goal should be to become financially free to where you don’t have to work but you work because you want to, and this should be at a younger age, maybe 40 or 50.
Maintain low expenses while building investments to where the growth on the investments is enough each month to pay your bills.
Carlson also said if you're older and haven't started these steps, it's never too late.