According to Educationdata.org, as of 2020, almost 48 million students have graduated from college with loan balances averaging $35,453. If you are one of the 62% of graduates who have student loans, you may be wondering how to prioritize your spending, saving, and money management. Although the best advice is specific to your situation, here are some general recommendations to get you started:

Make a budget: The word budget has a bad connotation, but it is not justified.  A budget is simply a plan for how you will spend and save the income that you make.  Start with your big-ticket items such as rent, transportation, food, utilities, and debt repayments (such as student loans and car loans).  Once you have outlined your “needs” see how much is left for your “wants”.  Rather than thinking annually, look at your cash flow on a weekly basis.  Using an app on your phone may help you or you can go low-tech and put money in envelopes.  The bottom line is to plan your spending so that you don’t end up short when it comes to paying for fixed expenses.

Start an emergency fund: Even if all you have is the proceeds from two skipped beers a week, start putting money in a special account you will not touch unless it is an absolute emergency. One of my favorite planners calls this her “Oh crap fund”.  The idea is to have something set aside for those unexpected moments so that you do not need to put it on your credit card at 20%.

Begin saving for retirement: A company retirement plan accomplishes more than just retirement savings. Payroll deduction makes it easy to save and if you are lucky, your company may match a portion of your contributions giving you an instant return on your investment. In addition, having deductions taken to go directly into your retirement plan lowers your taxable income which means you owe less federal and state taxes.

Increase over time: It is a tremendous challenge to put away the most you can save in any retirement plan once you get out of school – especially when you have student loans to pay off. But even if you cannot set aside the maximum in your various retirement options at the start, make it a goal to get there as soon as you can.  Raises, bonuses and commissions should be opportunities to add more to your retirement savings.  Your overall goal should be 10-15% of your income going to retirement savings.

Be an active participant: Studies show that many people simply go with the default option in their workplace retirement plan, which may not be the optimal one for you. One of the great reasons to engage a CFP® is to get some unbiased assistance in selecting the best options for you.  Review your retirement accounts on a semi-annual or an annual basis to make sure that you are invested appropriately.

Figure out taxes:  It can be difficult to estimate your taxes when you start working.  People either withhold too much or too little. While it can be tempting to plan for a big tax refund, remember that the government has use of your money for the year and does not pay you interest. Even worse, if you underestimate your taxes, you may be in for a big surprise come Tax Day. Using calculators like TurboTax Calculator (www.turbotax.intuit.com) can help you estimate your taxes in advance so that you don’t have any big surprises come April 15^th.

Get a financial coach: Ask for parents or grandparents for the graduation present of financial advice. A CERTIFIED FINANCIAL PLANNER^TM can help you set a spending plan to start tackling your student loan debt and look at how you will be able to save in the future.