Wisdom Wednesday: Top 5 Things To Know About Money Before You Graduate!

Congratulations! You’re graduating from college and you’re on the cusp of making real money. It’s exciting. But it can also be frightening. If you’re like most people, you’ve focused most of your energy on grades. You haven’t had a lot of time to pay attention to your finances. No worries though. This article is about to tell you the top five things to know as soon as you walk across the stage.

1.) Student Loan Debt

Now is the time to become familiar with any student loan debt. While many loans have a grace period, it’s still important to face your loans right now. And in case you’re wondering, a grace period is a period of time between graduation and when you must start making payments. Grace periods are usually six or nine months. Contact the National Student Loan Data System if you’re shaky about the terms of your loans.

Figure out how much you can afford to pay back each month. Create an action plan. Student debt is not easy to discharge – even in bankruptcy . Therefore, paying your student loans should be a priority.

2.) Credit Scores

Your credit score is important for many reasons: employment, buying a house – even just getting a rental agreement on an apartment. The higher your score, the better.

It’s okay if you don’t know your score right now. To get started, you can go to annualcreditreport.com . It’s a government website that lets you see your credit reports. Make sure all information is accurate. Although this won’t give you a credit score, it’s good to make sure there are no errors. Then you can know your score is accurate when you do discover your score.

There are many ways to get a credit score for free. For instance, many major credit cards come with free credit score monitoring. Here are several other ways to keep an eye on your score.

3.) Retirement Plans

You can fairly easily become a millionaire if you begin contributing to your retirement plan early enough. Plus, if you start contributing to your 401(k) on day one, you won’t miss spending the money. Ask anyone who’s age 50 or older; this is a great idea.

You can also contribute up to $5,500 per year to individual retirement accounts.

As a fun illustration, let’s assume you graduate at 22. You have $0 saved for retirement. But this same year, you begin contributing $5,500 annually. You invest the money in a simple mutual fund. Let’s assume you earn 7% annually – a very realistic number. Let’s say you retire at age 65. By this time, your account will look pretty healthy. At just $5,500 per year invested, your account will have grown to $1,458,154.01. At $5,500 per year, you’re virtually guaranteed to become a millionaire.

4.) Health Care

In the United States, you’re allowed to be on the health insurance plan of your parents until age 26. So you may have a few years. But it’s best to know what’s on the horizon. If you’re curious how much your own health insurance will cost, check out healthcare.gov and run an illustration. Or ask your employer to see how much the plan would cost.

I think the biggest takeaway of this exercise is to calm your fears. I know health insurance is a hot topic in the media but it’ll likely be cheaper than you think. Being an adult doesn’t mean being broke!

5.) Budgets

While some people do like budgeting every dollar, it’s not necessary. Budgeting can just be a catch-all word for watching how you spend your money. What is it you value? In what ways do you want to spend your money? Cars? Travel? A large home? Charity? A little of each? Budgets can help you meet your goals – even if they are more of an outline than a line in the sand.


If you’re responsible enough to have read this article, you’ll probably do just fine with your money. Just remember to earn, save and invest consistently. Enjoy your first ‘real’ paycheck!

Originally posted on iGrad.com

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