Preparing for Post-Graduation Finances: Top 5 Steps to Transition from College to Career

Whether you're graduating college or have a child or grandchild who is doing so, graduation marks the beginning of a new chapter in life. Planning post-graduation finances is an important challenge to overcome.
Updated: August 29th, 2023
Chris Brown

Contributor

Chris Brown

You are finally graduating from college, and while you are excited, a lot of things are running through your mind that are nerve-wracking. On the one hand, you're happy you're finally done with school and can start your career in a field you're passionate about. However, on the other hand, this might be the first time you'll be going independent, and many things, such as finances, will have to be handled differently. 

As chaotic as all this can appear, many students have gone through the same challenges and overcome them, and in this article, we'll be going over the steps that help them succeed in planning their post-graduation finances.

How to Transition from College to Career

Here are the top 5 steps you can take to prepare for post-graduation finances and make a smooth transition from college to career:

  • Create A Budget
  • Build An Emergency Fund
  • Pay Off Student Loans
  • Start Saving For Retirement
  • Live Within Your Means

1. Create A Budget

It doesn't matter if you had a budget while in college, as you'll have different expenses now. Take time to understand your income and plan how it can accommodate your spending. To do this, you should first list all your monthly expenses, such as rent, utilities, groceries, transportation, and any other recurring bills. Then, from how much money you'll make every month, allocate each expense to a budget. This way, you won't overspend in one area and then try and compensate by underspending in another.

2. Build An Emergency Fund

An emergency fund is essential for everyone, especially recent graduates. Your fund should contain at least three to six months' worth of living expenses in case of unexpected financial emergencies, such as job loss or medical bills. You should start building your emergency fund as soon as possible by setting aside a portion of your monthly income. 

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3. Pay Off Student Loans

If you have student loans, it's important to start paying them off immediately. This is because the longer you wait, the more interest you'll accumulate, which means you'll pay more in the long run. So, prioritize your student loan payments in your budget and consider refinancing or consolidating your loans to make them more manageable.

4. Start Saving for Retirement

Considering you recently graduated, it may seem like retirement is a long way off; however, it's never too early to start saving. The earlier you start, the more time your money has to grow. You could set up a retirement account, such as a 401(k) or IRA, and contribute as much as you can afford each month. Alternatively, you could consider other forms of investments, such as cryptocurrencies or the real estate market.

5. Live Within Your Means

As a final point, it's important to live within your means. This applies now and, in the future, as reckless spending will always expose you to risks. For this step, you might want to see this for the best courses on managing finances. Instead of buying that dream car or living in that beautiful apartment, you need to sit down and focus on your financial goals. 

A person in a suit looking at a crowd.

Long-Term Care Planning?

Does planning for future long-term care when you are young make sense? Usually, long-term care planning happens when you are in your 40s or 50s as you finalize your comprehensive retirement plan. However, even out of college, younger people are considering long-term care before then.

While some states are considering following the State of Washington in taxing those aged 18 and older who do not have a qualified LTC Insurance policy, there are better reasons to think about long-term care than avoiding a tax.

Some younger adults look at hybrid policies and other life products that include a qualified rider for long-term care. Traditional policies are also much less expensive at younger ages. 

Seek the help of a qualified LTC Insurance specialist to review if long-term care planning is appropriate at a younger age.

Transitioning from college to a career is a wonderful period, but it can also be scary. However, by following the tips in this article, you’ll find it much easier to handle your finances during this period. Just remember that it’s never too early to start planning your future.

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