Here's Our Tips on How All You College Grads Can Use That Graduation Money

byMeredith Morris


May 31, 2019 .4 min read

Spring is truly in the air!

Congratulations on graduating and saying goodbye to four years of unpaid internships and part-time jobs! At this point, you’re either welcoming a full-time job that comes with an attractive full-time salary, planning to see the world or planning to further your education. Whatever your chosen journey may be, at this point, the world is truly your oyster. Right? It’s only up from here!

But with all these amazing opportunities coming your way, there are, of course, some growing pains, that come along with it too.

Whether you’ve chosen to continue your education or enter the working world, it’s a time of change in many areas of your life, including your finances. And when it comes to your finances, there’s a lot that goes into making sure they’re in order as you enter a new season of life.

Here’s how to get your finances in order after graduation:

1 – Know Your Money

It might sound simple, but being aware of what your current financial situation consists of various pieces and is a critical part of getting your finances in order.

The best place to start is knowing how many bank accounts you have, what types of accounts they are and how much money you have in each of them.

After reviewing your accounts, you may find that you need to change your bank type and account types to better suit your current situation.

Here are some types of banks to consider:

  • National banks. If you plan to travel or aren’t sure where you’ll live next, you may want to consider a national bank; they have more branches across the country.
  • Credit unions and community banks. If you’re staying local, you might want to consider these types of institutions, as they’re known for their strong customer service. In addition to that, credit unions on average charge lower fees than big banks and they offer higher interest returns on savings.
  • Digital banks. Try an online-only bank if you prefer banking on your computer or mobile app. Digital banks offer higher rates on savings because they don’t have the financial burden of physical branch locations.

After you have decided what type of bank you should bank with, here are the types of accounts to consider:

  • A low-fee checking account. Keep it simple with a free checking account.
  • A low-fee savings account that grows your money. Savings accounts come in three varieties: basic savings accounts, money market accounts and certificates of deposit. Decide which type of savings account best suits your needs and let it grow!

2 – Build Your Budget

Building a budget comes hand-in-hand with knowing your money.

Once you’re aware of what your financial situation looks like and the types of account you hold, you’ll be able to build a budget.

When starting to build your budget, start by looking at how much money you’re bringing in each month and what necessities you need to cover like rent, utilities, groceries, transportation, and any outstanding debt. From there, you can figure out how much money will be needed each month for these things.

Once you’ve covered your necessities, you can build your budget to include "fun money," as well.

3 – Pay Off Your Debt

If you have any outstanding debt, make sure you have already built those payments into your budget (as mentioned above).

Most student loan servicers expect the first payment to be made six months after a student has graduated. With that, you’ll want to make some adjustments to your budget to be sure that you can make these payments on time and still afford your other necessities.

And while your student loans may have lower interest rates, you should still make your student debt a top priority. Make sure your loan payments are made on time and if you find yourself struggling with payments, consider different repayment options such as:

  • Repayment Plans for Federal Loans. This can include Income-Based Repayment Plans, which caps your monthly payment at 15% of your discretionary income, for up to 25 years, or Pay As You Earn Plans, which is capped at 10% of your discretionary income for up to 20 years.
  • Deferment. If you go back to school, participate in a service program, such as the Peace Corps, or are unable to find a job deferring your loans will allow you to stop making required monthly payments as you attend school or a qualified service program.
  • Forbearance. If you are struggling to find work or can’t afford to pay the amount due each month, forbearance might be the next best option. Forbearance typically lasts for no more than 12 months and leaves you responsible for the interest the loans accrues during your forbearance period.

And if you have a car loan, pay it off as soon as possible. Why? Because of the interest. After all, who wants to pay more money than necessary?

But the longer you wait to pay off any of your debt, the bigger it will become. So, it’s best to plan to pay off your debt as soon as possible to avoid paying more than you need to.

4 – Prioritize + Choose Wisely

In a world where every social activity is blasted on Instagram and Snapchat, and FOMO is nearly ingrained in our bones, it’s become hard to say "no thanks" to people. However, saying "no thanks" can save you a lot of stress from a financial aspect.

For example, if you’re considering going on a trip with your friends, but that trip could potentially put you into debt, it isn’t’ worth it. It’s best to consider how much debt the trip will put you in and how much it’s going to set you back. Will this trip dip into an emergency fund? If so, you probably shouldn’t go.

It’s all about prioritizing. Your bank account will thank you later for making the right financial choice by not stretching your funds too thin, and ensuring that you’ll have the money you need for next month’s rent and everyday necessities.

It might feel like there is a lot to think about, but you’ve got this! Be intentional for how you’re spending your money, be aware of your current financial situation, and don’t procrastinate. You’ll be just fine.