Financial Planning for Recent Graduates

If you’ve just recently graduated from college, there’s a good chance that you now have more responsibilities, more stress and anxiety, and a feeling of confusion trying to adapt to adult life.

What makes everything even tougher is that college leaves you wildly unprepared for what real life is actually like. I was a finance major in college and upon graduation, I still didn’t know too much about personal finances and that was where the idea for Piertree Planning was birthed.

College doesn’t cover:

  • How to reduce your taxes

  • What kind of insurance should I have

  • How and when do I start investing

  • How to apply for mortgages

  • How to improve credit

None of that.

A financial planner that specializes in recent graduates can play a crucial role in your financial future.

Some of the most important and impactful decisions are made within a few years of graduating such as renting or buying, paying off debt, building credit, and choosing your career to name a few.

How a financial planner can help

When you think about a financial planner, you might be picturing an old white guy sitting in an office talking about complex financial terms and unfortunately, you aren’t wrong. This is what financial planners and advisors looked like for many years, but luckily things are starting to change

The role of a financial planner is to help you achieve your desired financial goals and as a recent graduate, you’re going to experience many “firsts”.

Buying your first home

Starting a family

Getting your first credit card

Opening your first investment account

Getting your first insurance policy

Getting your first raise

A financial planner will help guide you in the right direction to make decisions that align with your goals and put you in a position to succeed.

Here are a few of the most important ways to set yourself up for long term success:

Establish Your Goals

Without goals, it’s hard to develop a plan to get where you want to go. Everyone’s situation is different so your goals may not be the same as your friends or coworkers.

Some of the most common goals that recent graduates are aiming for are paying off student loans, building your credit score, and saving for your first home.

A financial planner will be able to help determine the priority of these goals, develop a plan to achieve them, and evaluate if there are any other areas that need addressed as well.

Pay Down Debts

Student loans are consuming the lives of many and it doesn’t have to be this way.

One of the best ways to pay down debts after graduating is to continue living like a college kid.

I know, dream come true right? Your college life may not be completely over yet.

But what I mean by this is that when you get that first job that pays way more than a summer job ever did - it’s easy to get that nice apartment, maybe buy a car, or whatever else you want to spend your extra money on.

But if you have debts, continuing to live frugally like college forced a lot of us to do can be one of the most effective ways to pay off those debts.

Build a Budget

I know you’ve probably heard this from several people throughout your life, but a budget doesn’t need to be scary or something that you dread doing.

It can be as simple as figuring out what your monthly take home income is, and deciding the best ways to spend that money. Tracking your expenses may be necessary at the very beginning, but once you’ve done it for a while you’ll learn what you spend in certain areas and your budget just becomes a way of life.

ALSO READ: 3 Easy Budgeting Tips for Millennials

Think About Your Future

Without goals, it’s difficult to get where you want to be. Taking the time to think about your future and where you want to go in life can help make financial decisions a lot easier.

If you know you want to start a family and buy a house in your late 20s, starting to save for a down payment and child expenses is going to be an important part of your financial picture.

The tricky thing about goals is that they may change throughout your life so it’s important to review them and adjust your plan to align with those goals.

Working with a financial planner

It may be difficult to see the value of a financial planner if you haven’t worked with one before, but the benefits of working with a good advisor can be endless. One of the most important things to look for when choosing a financial advisor are their fees.

Many advisors have complicated fee structures that end up benefiting their wallet and hurting yours in the long run. Finding an advisor with affordable and transparent fees is not always easy, but they do exist.

As I mentioned earlier in the article, the role of a financial planner is to act as a partner and help you achieve your financial goals.

Not all financial planners help you build a plan for your financial life. Some may only handle investments and if you’re a recent graduate, there are so many other areas that need attention other than just investments.

As you adapt to post-college life, remember that starting a plan early will only increase your chance of achieving success and being young, time is on your side. While it may not be your top priority, meeting with an advisor may be worth your time if you don’t have experience managing your cash flow, debts, and everything else that comes up that college didn’t prepare us for.