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Launching into Financial Independence

Published on May 15, 2024

A Guide for New College Graduates

Graduation marks a significant milestone in life, symbolizing the transition into adulthood and often the first step towards financial independence. Yet, for many, the path to financial stability can feel daunting, especially if the groundwork hasn’t been laid.

So, how can graduates bypass the financial stress and confidently enter the next phase of life? Let’s kickstart their journey with these essential steps, giving them – and their parents – another reason to celebrate.

For most college grads, the harsh reality of student loan debt looms large. It’s crucial to factor in these repayments when crafting a budget. Sitting down and meticulously recording income versus expenses is key to successful budgeting. While it’s tempting to view a new diploma as the ticket to a lavish lifestyle, the truth is it may take time to achieve that coveted status. The simple solution? Budgeting to live within one’s means. Those college ramen nights might make a guest appearance, but they’re a small sacrifice on the road to financial freedom.

One of the most frequently asked questions posed to financial professionals is, “When should I start saving for retirement?” The answer is simple: it’s never too early – or too late. As fresh, enthusiastic professionals’ step into the workforce, it’s imperative to take action and begin saving now.

If your new job offers an employer-sponsored 401(k) program, seize the opportunity and enroll immediately. Don’t fret if your position doesn’t come with these shiny retirement savings programs. Consult with a financial professional to explore alternative options, such as Roth IRAs and other retirement savings vehicles.

It’s ironic to consider that as individuals enter the workforce, their ultimate goal is to eventually leave it – but diligent retirement savings early on ensures a comfortable and secure future.

While in college, it is easy for one to become consumed with the pursuit of phone numbers or Instagram followers, but there is another number more deserving of attention: credit score. Building credit takes time and effort. Paying your bills on time and maintaining low credit card balances are crucial factors in establishing good credit. Additionally, it’s important to consider debt-to-income ratio, including any student loan debt.

Having an optimal credit score can equal monumental savings in interest rates. And here’s a fun fact: many car insurance companies consider credit as a factor when calculating rate. So, when busy building connections and social media followers, don’t forget to prioritize building a credit score for a financially secure future.

At John Douglas Insurance and Financial Group, we recognize that recent graduates might not prioritize budgeting, retirement planning, or credit scores. We’ve been in your shoes before, and we understand. Our hope is that blogs like this will inspire you to understand the significance of cultivating these skills early on. As the next generation prepares to take the reins of their financial freedom, they can count on us to be their trusted partners every step of the way.

Securities and investment advisory services offered through Osaic Wealth, Inc. member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth.

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