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You are a Recent College Graduate, Have a Job and Now What?
Plan your financial future after college, through your twenties
and beyond.
A new car is the first purchase most college graduates want to
make directly after graduation. You may ask yourself, what is
the matter with being rewarded with something nice after
completing such a hard task that you have been working towards
your whole life? Depending on what your entry-level job pays; it
would be wise to spend accordingly with your available income.
Many graduates think they are getting better paying jobs than
they actually get after college, so they purchase a vehicle way
out of their price range. "I know when I graduate in December,
it will be nice to get a new car, but I know there will be
student loans and other living expenses to pay off first," says
Jayne Santucci, a senior at Florida Atlantic University. "When
recent college graduates get their first job, they see their
co-workers with brand new cars, so they think they should get
one also, not knowing the co-workers experience and salary,"
Santucci adds.
If you are going into a career that coincides with your college
major, you may want to consider starting with an entry level
position rather than taking a higher paying job in an unrelated
field. The entry level job will be better for you in the long
run because it will give you more opportunities to advance in a
field that you were trained in. If you start with a higher paid
job in a different career, you might lose interest quickly and
have little room for advancement. Stick with your career, and
the money will eventually come.
When you get hired for your first job in the "real world," find
out what kinds of retirement plans are available. The majority
of employers offer 401(k) plans or other tax-deferred retirement
options. With every paycheck you receive, you can contribute
money into the 401(k) and many employers will match some part of
your contribution. This will help you save for your future.
Start your savings account immediately and if at all possible
have your money directly deposited into your account. Learn to
pay yourself first!
According to CNN Money, college graduates of 2005 are being paid
more in starting salaries than the class of 2003-2004. Here is a
list of the average salaries for college graduates.
Accounting- $41,039 Management- $35,811 Teaching- $29,733 Sales-
$37,130 Nurse- $38,775 Financial /Treasury- $45,596 Software
Design- $53,729 Consulting- $49,781 Source: CNN Money 2005
After obtaining their
landing your first job, many college
graduates think it may be a good idea to move back home with
their parents so they can save money. Saving money is not always
the case when moving home. Having the feeling of fewer bills can
provide you more freedom for going out and buying an expensive
car, stereo or designer clothes. So, instead of saving your
money, graduates could be spending it on items they do not
really need. It might be a smarter idea to actually stay
independent because you will grow and may learn faster what it
means to be self-reliant. As a college graduate, you may
struggle starting out at first, but it will be beneficial to you
in the long run.
The most important word to you, a recent college graduate,
should be "b-u-d-g-e-t." By creating a budget, it will give you
the opportunity to design a method to pay your bills and save
for something you really want. The better you are at sticking to
a budget, the more peace of mind you will have when it comes to
your personal finances.
A person's twenties could be the most important years to start
achieving your financial goals. The earlier you invest the
better. If a 25-year-old who invests $2,000 a year at a 6
percent compound interest annually for fifteen years and never
invests another dollar, after the age of 40, the 25-year-old
will earn more by the age of 65 than a 35-year-old who invests
$2,000 a year at 6 percent compound interest annually for 30
years, even though the 35-year-old would have invested twice as
long.
Last but not least, it is important to identify a short, medium
and long-term goal for yourself. A short-term goal may be a new
car, a vacation or a television. A medium-term goal could be
buying a business, a house or paying for your child's education.
A long-term goal can be retirement and traveling.
Managing money as a young adult can be the most important in
terms of your financial situation. It is best to do research and
want to learn about how to manage your credit, bills, and any
extra expenditure before it is too late. Be smart with your
money.
About the author:
Pete Glocker is employed in the Education and Charitable
Services Department at Debt Management Credit Counseling Corp.
("DMCC"), a 501c(3) non-profit charitable organization located
in Boca Raton, Florida. Pete graduated from Florida Atlantic
University with a BA in Multimedia Journalism and is an
experienced web producer for Tribune Interactive products
Sun-Sentinel.com and SouthFlorida.com.
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