How Students Can Navigate Financial Challenges After College – NBC 5 Dallas-Fort Worth
Right now, college graduates are moving into postgraduate life and facing the real financial challenges of adulthood.
So what’s at stake for them in 2021?
“The good thing is that things open up, opportunities open up. The economy is growing absolutely. There will be job growth and opportunities. So this could be a great time to get into the job market, ”said Bobbi Rebell, certified financial planner with consumer tech company Tally.
According to CNBC, 45% of the 2020 class is still looking for work.
Student debts are also entering record territory. According to Forbes, the record this year is $ 1.7 trillion. Around 45 million borrowers owe that much money.
Texas alone accounts for $ 113 billion of that debt, the second highest in the country.
President Joe Biden has suspended payments on federal student loans until the end of September as Congress and the White House continue debate over canceling student loans.
Graduates move into postgraduate life and face the real financial challenges of adulthood.
Typically, most loans give students a 6 month grace period after graduation before they have to start paying.
Meanwhile, Rebel said students can plan ahead to prepare for financial success. She said students need to plan now to prioritize paying off the highest interest debt and schedule automatic payments for loans, credit cards, and other bills that will pile up this year.
“Understand how much you are paying in relation to each bucket of debt and make sure you prioritize accordingly,” she said. “Student debt should be a priority, of course, but maybe not the ultimate priority since the interest rate you pay on student debt is often much lower than credit card debt.”
After that, students can calculate their actual cost of living in order of importance. Rebel said it should look something like this: rent, food, insurance, cell phone and WiFi service, expenses, among other things.
Rebell added that while paying off student debts is important, it doesn’t stand out against other obligations like contributing to a retirement plan or building an emergency savings account.
“Make sure, of course, that you pay the fair amount for your student debt, but don’t get so caught up in your not contributing to a 401 (k), for example. Especially when the company you work for has a suitable program, ”she said. “It has to be a balance because time is on your side when it comes to investing, and I don’t want anyone to spend so much of their financial resources on paying off debts that they neglect not just investing , but also to have this money cushion at their disposal. ”
According to Rebel, students must also wonder whether the best financial move is to live alone, find roommates, or move home to save money.
It is also important to keep track of how much money you are spending each month and what you are not losing control of. Rebel said smartphone apps are your friend.
“Personally, I can’t stand budgeting. But here’s the cheat: now everything happens digitally so you can see what’s going on. If it works for you, write it down, and for a lot of people, write it down, ”she said. “Everywhere you make your payments, try to keep them in the same place as almost every system imaginable has a setup that you can sort it out for you. And you will see your money. This will keep you motivated in the future because when you see what you are spending so much money on, you will be motivated to make those changes. “
And because of the pandemic, it’s important that students start building a savings cushion in the event of an emergency.
“If there’s one thing we’ve learned from the pandemic, it’s important to enjoy life in the present. But if there’s a second thing we’ve learned, it’s that we need this money cushion to be really comfortable because financial circumstances – like employment – can change in the short term, ”Rebel said.
Finally, she said that students need to ask as many questions as possible.
“Make sure you set things up the right way. Don’t be shy if you don’t feel like you know something. It’s okay to ask questions, ”she said. “Make sure you educate yourself. You went to college or high school and got an education. But you likely haven’t received any training in the day-to-day financial decisions you will make. Instead of saying, “I should have been taught, I wish I could have been taught” – teach yourself. “