4 Critical Money Tips for New Graduates

Aaron Stevens |

As recent graduates enter the workforce, they may need to make some financial decisions to help them prepare for potential economic uncertainty such as inflation, rising real estate prices, and a volatile stock market. If planned wisely, the choices these new graduates make may also help them work toward financial goals. Here are four crucial money tips every graduate should consider.

Plan Student Loan Repayment

Some college graduates are fortunate enough to be debt-free. Among those who received a four-year degree from a public college or university, 42% had zero debt. However, 35% had $20,000 or more in student loans.1 The remaining 23% of graduates had between $1 and $19,999 in debt.

For those with federal loans, not only may you benefit from the grace period after you graduate (either six or nine months), but you may also take advantage of the pandemic moratorium on federal student loan repayment, which extends to Aug. 31, 2022.

To create a student loan repayment plan, you need a budget. You may allocate extra budget funds toward your loans to finish repaying them sooner or refinance your loans to manage your interest rate and monthly payment.

Begin Saving for Retirement

When you start your first career job, retirement may seem impossibly far in the future. But the more you save now, the less you may need to save later. Money you invest when you are 25 may have far longer to grow than money invested when you are 35 or 40. You may save through accounts offered by your employer like a 401(k) or a 403(b) or through individual accounts like an individual retirement account (IRA) or Roth IRA. If your employer offers one, you may also contribute to a Health Savings Account (HSA), a Flexible Spending Account (FSA), or another health-related savings vehicle.

Review and Build Your Credit Score

You might qualify for better credit offers with a higher credit score, such as a competitive mortgage rate or a lower interest rate to refinance your student loans. Some of the biggest contributing factors to a high credit score include the average age of your accounts (with older being better), your payment history, the amount of credit you currently owe, and your credit mix, which is the different types of open accounts you have.

Employ a 50/30/20 Budget

It may be tough to match your expenditures to your income when creating a budget. The 50/30/20 budget strategy recommends the following:

  • Spend no more than 50% of your budget (or net income) on rent or mortgage, child care, student loan debt, food, health insurance, and utilities.
  • Put aside at least 20% of your net pay to fund your savings and retirement investments.
  • Spend no more than 30% of your budget on non-essentials, such as travel, restaurant dining, shopping, and other splurges.

This budget structure provides some room to have fun while still helping you save for your future at an adequate rate. The table below illustrates reasonable budget guidelines for recent college graduates.2

Some Reasonable Budget Guidelines

% of Monthly Income

Housing and Utilities


Student Loan Repayment


Food (includes groceries and eating out)


Credit card, auto, and personal loan


Transportation (includes car payment, insurance, gas, maintenance)




Medical and dental expenses







1 2022 college graduation statistics, Bankrate,

2 Why creating a student loan payment plan is important, plus 4 more money tips for new grads, CNBC


Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

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