Experts say discipline and saving money are essential to young people meeting their financial goals.
Personal finances are a source of worry for many young adults and recent college graduates. According to experts, rising tuition costs have led to higher average student loan debts, leaving many graduates feeling behind financially even before they begin their careers.
According to a 2024 survey conducted by Earnest, a student-centered financial planning company, among 500 college graduates in the Class of 2024, many feel unable to handle the financial responsibilities and burdens that come after college. The study discovered that a significant proportion of the respondents are delaying major life goals because of debt and feel unable to handle finances and loan repayments. Additionally, 16% of the respondents claimed they would not have attended if they had known how much they would have to pay back later.
Nonetheless, analysis claims that many recent graduates are left vulnerable financially because many industries find it difficult to provide beginning salaries that keep up with the growing cost of living.
Stacey Black, the lead financial educator at the Boeing Employee’s Credit Union, says, “We’re at a really difficult time, and it’s tough for them.” She continues by saying that many young adults and new college graduates feel pressure from society to start a family or buy a house or car, but they don’t think they can afford it.
“There’s so much pressure to live the American Dream and do the right thing. Well, what is the right thing? You have to decide what the right thing is for you individually.”
According to experts, reaching financial goals requires patience, dedication, and saving. These are four suggestions for post-college financial preparation.
Regular savings
Experts say building cash savings is a key strategy for reducing financial burdens, whether for an emergency fund, medical bills, life goals, or other living expenses. It requires self-control and the willingness to forgo immediate pleasure for future financial reward.
According to experts, young professionals often think they can wait until later in their careers to start saving, but the sooner they do, the more they will save.
Andy Smith, executive director of financial planning for Edelman Financial Engines, says, “I encourage people to save as much as they can for as long as they can.” “Any amount that you can save is a great starting point.”
He added, “If you can just put your head down, put one foot in front of the other, kind of go on autopilot, and not think about it as best as you can, you really do have the opportunity to see some of those incremental changes build up to something over a period of time.”
Contributing to Retirement Funds
While limiting retirement contributions to cover early career-career expenses may be tempting, Smith advises young people to contribute as much as possible to a retirement fund such as 401 (k), 403 (b), or individual retirement accounts. He added that it’s another way of saving, and you can “make time work for you.”
He also emphasizes the need to think in terms of percentages rather than dollar amounts. Many employers march employees’ retirement contributions. Therefore, he recommends contributing enough to receive the entire company match.
“Then turn on the auto escalators so each year you get that additional 1% in savings,” Smith says. “Over time, as it goes for six, seven, eight or nine years, that’s an additional 6% to 9% being added in the 401(k). Figure out what you can carve out of every dollar that you bring in. Once you have that, really try to think as long term as possible. Get the money working for you somehow in this investment opportunity.”
Setting a budget
According to experts, creating and sticking to a budget may not be fun, but it is critical for avoiding living beyond one’s needs.
Brian Steiner, executive director of Life Happens, a non-profit, stated, “While a budget may make you feel like you are limiting yourself, you must keep the bigger picture in mind in the long run.”
He added, “For most people just starting their careers, they are often getting access to more money than they had before.” “It’s important to sit down and assess your fixed expenses and what you can afford so you get a good grasp on your discretionary income.”
“Give yourself permission to spend, but make sure you budget for it,” she says. “If you haven’t budgeted a weekly amount, then you’re going to feel like you can’t spend, and then if you’re like me, you’re going to spend more. I think a lot of people do that when they’re feeling overwhelmed.”
Decisively Pay Down Debt
According to media reports, the average student loan debt is approximately $30,000. Student loan and credit card debt must also be considered when preparing a budget. Experts recommend that paying off debt as soon as possible be your top priority.
Experts usually suggest starting with the debts with the highest interest rates, which are almost often credit card debts. Since private student loans typically have higher interest rates than federal student loans, borrowers with private loans might also want to pay them off promptly.
