The New Grad’s Guide to Money

July 30, 2015

Yes, you just spent four years amassing a crazy amount of knowledge.  But despite all you’ve learned, you possibly still have an incomplete grade in one subject: money.  Suddenly you’re at a financial turning point, facing challenges like finding a place to live and starting a new job.  At the same time, your college friends have scattered across the country, the clock is ticking on your student loan grace period, and you are feeling broke, really broke. 

Don’t worry.  The basic money skills you need to get on your feet are easy to master.  And by doing so right out of the college gates, you’ll have more opportunities off in the future – and greater peace of mind right away.


Remember life before college?  Seasonal wardrobe updates, lots of dinners out, new cellphones on a regular basis?  Well, Mom and Dad worked a good 20 years or so before they could afford that lifestyle, so don’t expect to carry on as you did when you lived at home.

Direct deposit and auto-deduction make it easy to set aside money before you spend it.  To make sure you have enough for large, regular monthly outlays like rent, savings, and student loans, set up your paycheck for split deposits.  Put money for necessities in one account, cash for everything else in another.

Think about spending in terms of tradeoffs: Would you rather buy x now or y later?


Most likely, you’ll share your first home post-college with a roommate or two.  And there’s a good chance their names will be Mom and Dad.  Whomever you’re living with, make it a time for saving money.

Moving out of your childhood home?  Aim to spend no more than one-quarter of your income on rent.  Moving back in with the folks?  Be sure to wash your dishes.  But you’ll really warm their hearts if you take advantage of your rent-free digs and set aside at least 25% of your salary. 

Student Loans

You can’t wriggle out of repaying student debt, but you can choose how you pay.  Instead of a standard 10-year plan, you have other options: lower initial payments or more time to repay, in return for higher interest costs.  You have six months after graduation to choose a plan (which you can change later). 

Run numbers to see what you can manage.  On the average federal loan balance of $27,000 for a four-year public college, you’d pay $272 monthly under the standard plan; under another one that bases payments on your income, a person making $35,000 would begin paying just $146 but owe $3,100 more in total interest.

Automatically deduct payments from your bank account; paying on time helps your credit score.  At tax time, deduct your interest payments, up to $2,500, on your return (the deduction is phased out for singles making more than $80,000.  Tax savings: up to $625.

Get a list of your federal loans at  Use the government’s Repayment Estimator ( to ballpark payments under different plans.


Stuff happens – stuff that costs money.  Your car might break down… or a friend might invite you to his spur-of-the-moment Vegas wedding.  Be ready without having to fall back on a credit card you can’t pay off.

An emergency fund of about $1,000 is enough for you.  Set a little money aside from any graduation checks you receive, and add $50 or so a month into a bank account – one that’s separate from your day-to-day account, so you won’t be tempted to raid it for everyday needs.

From Money Magazine, June 2015