Life after graduation: what college students should know

Marching into life after graduation soon? Here's what you need to know...

Collegiate life is sort of a fantasy world. It’s okay to roll out of bed at noon for class, eat copious amounts of junk food and while you likely don’t have much money, your parents tend to handle your immediate expenses. There’s a reason people often call it the college bubble. But that bubble tends to burst right around graduation (or at least when your student loan repayment period begins). After spending the first 22 years of your life depending on others financially, you are thrust into adulthood. Suddenly, you’re expected to do things you never had to. Things like keeping a budget, paying bills and maintaining a solid credit score. While college certainly prepares you for a career it doesn’t necessarily prepare you for life.

As a result, many new graduates are ill-equipped to handle the realities of adulthood and financial management. And oftentimes, this ill-preparedness results in poor financial decisions due to lack of planning and budgeting. And the results can be both disastrous and difficult to overcome.

But like a student’s coursework, responsible financial management is something that can be taught and learned. And we have compiled a checklist of essential tips to make the transition from campus to life after graduation as smooth as possible.

Set Budgets

Most college students scoff at the idea of setting a budget. For most of your life, necessities like housing and food are taken care of by your parents. Making whatever money you receive or earn disposable income. But as a college grad, you’ve moved into a new apartment and have to pay rent, electricity and prepare your own meals. And if you’ve never had to worry about these things, the cost can come at quite a shock.

But it doesn’t have to be. While you don’t have to account for every dollar spent, you should have a basic idea of where money is going. Use your salary as a starting point and determine how much you can reasonably spend on necessities like housing, electricity, phone service, internet and food. Working with your parents to determine reasonable estimates for each of these is a great idea.

If you’re particularly ambitious, you can also plan to set aside some money as savings. Doing this will eventually make sticking to your budget easier as you will no longer be living check to check. Moreover, it will allow you to splurge on miscellaneous dinners and nights out.

Be Mindful of Student Loans

A common mistake undergrads make is treating student loans as free money, or simply thinking that they will worry about it when the time to repay them arrives. This is a mistake and student loans are a very serious matter. Millions of Americans are struggling to make their payments and even more are left living paycheck to paycheck due to high payments.

And while there are methods to address high student loan payments, such as consolidation, the most prudent approach is avoiding this situation altogether. Of course, with college tuition rates rising every year, completely avoiding student loans is nigh impossible. So unless your parents are wealthy or you have a significant college fund, you’ll no choice but to do so.

But students and parents should strive to exhaust all options before taking out a loan. The first step should be applying for any scholarships you may qualify for outside of the student aid your university offers. Getting a part-time job is another wise choice. Many students use student loans to cover day-to-day expenses such as food, gas and recreational purposes. While these are certainly necessities, these are also expenses that can be covered with a part-time job. Those $10 lunches are much more expensive if you consider the fact that you’ll be paying for them over the following 20 years.

Credit Cards

Credit cards are a bit of a catch-22. Young people are often told they should avoid credit cards and only spend money they have. However, having established credit and a good credit score makes life significantly easier. So what’s the answer? Like most things, the answer lies somewhere in the middle.

Students and new graduates should definitely establish credit, but they should use credit cards responsibly. What exactly does responsible credit card use entail? Ideally, responsible credit card use involves only using credit to purchase items you can afford to pay for outright. By only purchasing items, you can afford to pay for outright, you should be able to pay all or most of your balance once you receive your statement. As a student or new grad, you will likely exit college with thousands of dollars in student loan debt. You don’t want to compound that debt with credit card debt.

Particularly hands-on parents will often take matters into their own hands. It isn’t uncommon for parents to take credit cards out in their names. The parents will make on-time payments for the duration of their child’s studies and build their credit. Upon graduation, the child will have a strong credit score and an established credit history.

ATM Fees

This is probably the most avoidable item on this checklist but it’s still worth mentioning. When using an ATM, try to use one associated with your bank. Customers using debit cards at an ATM that isn’t owned by your bank are assessed a $3 fee for each withdrawal. While this doesn’t seem like much, it can add up quickly if you do this regularly. So if you absolutely need to take out cash, it is best to take out a large sum of money rather than making multiple small withdrawals.

Another available option if you are in need of quick cash is going to a grocery store. Most grocery stores allow you to request cash back at the register. You can simply pick up a relatively inexpensive item that you’ll use such as gum or a bottle of water and get a $20 back. This is a cost-effective alternative to using an ATM owned by another bank.