College is a time to work hard at school, but it's also a time to let loose and have fun. Indeed, it may be the last time in your life when you're accountable to no one and can just really enjoy your life. After college, you'll begin the slow ascent to adulthood–getting the first job in your career field, perhaps getting married, buying a house, having a child, saving for retirement for yourself and college for your children. . .
When you graduate from college, consider making these financial moves:
1. Open a Retirement Account. The sooner you can do this the better because you'll have the power of compounding interest working for you. If money is tight right out of college, consider just putting $50 a month in your retirement account. Any amount can help you get ahead, and as your income increases and your debt goes down over the years, you'll be able to increase your retirement contributions.
2. Consider Drawing Up a Will. You may think that you don't need a will until you have children, but if you have any assets, you'll want to have a will in place. You can find a quality lawyer by asking your friends and family for referrals. Don't forget to also take the time to determine the lawyer's qualifications and credentials. This can be easily done by using a site like LicenseDirect.
3. Open an Investment Account. Retirement accounts are important to save for your future–perhaps 40 to 50 years down the road. Investment accounts can help make your current life more comfortable and secure. You can use a financial planner, or you can go through an online broker and likely save money. Just like retirement investing, if you don't currently have a lot of money, know that any amount you can invest will help your future, even if it seems like a paltry sum.
4. Save Money for a House. The mortgage market has gotten tighter in recent years, which means you should have 20% down when you purchase a house. (Plus, you'll have the advantage of bypassing private mortgage insurance.) In some areas of the country, 20% down is quite reasonable; in other areas, you could be looking at a down payment of $100,000 or more. You'll want to begin saving as soon as possible.
5. Pay Down Debt. If you are able to do all of the above and still have a bit of money left over, paying down those pesky student loans is a good idea. The sooner they're gone, the sooner you'll have more money to use and grow as you see fit.
Your first few years out of college are crucial ones, financially speaking. If you implement these five steps, you'll likely be paving the way for a much more financially secure future than your peers, and you won't have to panic when you turn 40 as many others do when they realize retirement is only a decade or two away.
What other money moves do you recommend after graduation?