Welcome To The Real World: Expert Money Tips For Recent Grads
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Leaving the safe walls of college to enter the real world can be scary as heck. 

From having on-campus resources at your fingertips and a regimented schedule set by your professors, it can be a whirlwind leaving that all behind after graduation. Particularly daunting is what happens financially. Money-management skills are a must for survival, and one that most of us didn’t receive much insight on during our school days. For instance, just seven states require schools to offer a stand-alone finance class and legislators in 25 states and the District of Columbia have just begun to introduce financial education bills this year. 

And let’s not forget about the debilitating student loan debt that may have accrued if high tuition costs aren’t fully covered by scholarships, financial aid or out-of-pocket payments. 

We know it can be a lot to think about. 

That’s why we tapped financial expert Raya Reaves to help recent grads make smart money moves after walking across that stage. Reaves is a  finance coach and founder of City Girl Savings, an organization that teaches working women how to reach financial success.

#1: Don’t wait too long to start paying on your student loan balance. 

As mentioned, we are in a trillion dollar student loan crisis with no real sign of our current administration offering wide-spread relief to the millions of borrowers drowning in debt

In response to Biden’s move to cancel $415 billion in student loans back in January, Bernie Sanders tweeted, “Good. Now cancel the remaining $1,883,214,046,704 for 44,984,000 other Americans who are still drowning in student debt.” 

Reaves said you have to be smart and swift to avoid the student loan death…ahem…I mean debt trap. 

“If your student loans are deferred for a certain amount of time, but you have the ability to start paying, then start paying! Even if you pay as little as $25 a month towards your loans, you are making it easier for your future self,” Reaves shared with Essence.  “Don’t let the high balance scare you into thinking about it later”, the balance isn’t going anywhere. The sooner you start paying them down, the sooner you will be done with them.” 

#2: Establish good credit building habits now. 

As adults, we know that good credit opens doors that cash just won’t–and with the recent news that Wells Fargo is allowing credit card users  earn points from tasks like paying rent, it seems like financial institutions are offering more ways than ever to build good credit. But you have to be smart. 

“I had to learn the hard way the value of good credit – zero to low interest rates, ease of borrowing, and the option to get what I needed, when I needed it,” Reaves said.  “The earlier you can start building a good credit history, the more options you’ll give yourself in the future. Whether it’s buying a new car, getting your own apartment (without a cosigner), or purchasing your own home one day. Not sure where to start? Consider a Self Credit Builder Account! You get to decide on an amount and payment term that works best for your budget…and you already know how important a budget is! Then, as long as you make on-time payments every month, you start building up your credit history. Once you’ve paid off the Credit Builder Account, that money is all yours to save.” 

#3: Use a budget and track your spending.

In college, most of our major expenses are wrapped into tuition costs, so it’s easy to spend blindly. After graduating however, an accumulation of small expenditures can quickly turn into big problems if you’re not careful. 

“Most of us aren’t lucky enough to make major bucks fresh out of college,” Reaves said. “According to the National Association of Colleges and Employers, the class of 2020 graduates earn an annual salary of $55,260. While this number has been steadily increasing each year, the cost of living in the United States has gone up as well.  It’s crucial for college graduates to start using a budget and track their spending. Building those positive financial habits now will make sure you can handle salary increases in the future. Not to mention, a budget is one of the best tools for reaching financial success and happiness!” 

#4: Start contributing to a 401k or IRA immediately.

Saving for retirement seems like a task that should be prioritized years from now, but Reaves said you should be pushing it to the top of your list, especially after landing your first salaried job, or launching a new business. 

“Most companies don’t start matching your 401k contribution until you have been employed for at least one year,” she said. “That doesn’t mean you can’t start contributing to your 401k right when you get hired. The sooner you start saving for retirement, the more you will have when it’s time to retire. In fact, a 25 year old who contributes $300/month until the age of 65 will have over $1 million dollars at the time of retirement (assuming the historical 8% growth rate). If you start contributing earlier, you will have more! If you don’t have the ability to contribute to a 401k, then an IRA is a great second option!”