Whether you’re heading straight to a job or will be off to college, graduating from high school brings exciting new independence. With that long-awaited freedom, though, comes a whole new level of financial responsibility. Although you’re likely to face an evolving job market and may have limited money management experience, a little planning can set you up for a lifetime of financial health.
Here comes the real world
After high school, you’ll be relying less on mom and dad to bail you out of shortfalls and instead be finding dependable income sources of your own. Professional networks including LinkedIn help identify relevant openings, but if your area’s job market is especially tight you may want to consider relocating for better opportunities.
Becoming more financially responsible also means beginning to save and invest to secure your future. Financial institutions such as Christian Community Credit Union offer a comprehensive variety of savings options including traditional and money market accounts for regular needs and saving certificates and retirement accounts to prepare for long-term goals. Additionally, if your employer offers a 401(k) contributory retirement plan, be sure to join it.
Those going on to college should plan for educational expenses. You may know by now whether federal aid, scholarships and family savings will cover those costs. If not, you may still be able to close the gap with a private student loan. Keep in mind, though, that you’ll leave school with an obligation to repay this debt, so early, consistent saving can be of particular importance during your college years.
Establish a budget
One of the best ways to build financial security is to create a budget. Add up all income sources and then total monthly expenses such as transportation, clothing, entertainment, and if applicable, housing costs. A budget worksheet will help ensure nothing is forgotten. Subtract expenses from income for a basic financial picture and then earmark any surplus for saving toward future goals. If there’s no free cash left over, try to adjust your budget by cutting back on unnecessary expenses or by trying to pick up some additional income.
Build solid credit
Credit scores generally carry more weight in life than final test grades ever will, affecting everything from your borrowing power to landing good jobs, an apartment and even insurance rates. So it can be vital to begin building credit. Both student credit cards and store charge cards can offer good ways to establish or build credit. To boost or improve your scores:
- Pay all your bills on time and in full, without exception.
- Aim to keep charge account balances at 30% or less of your total credit limit.
- Carry a mix of different types of debt, which might include a credit card, student loan, auto loan and a retailer’s installment purchase plan.
- Don’t apply for more credit than you need—each time you do can lower your score.
- Monitor your credit regularly to identify and repair blemishes.
Effective budgeting, goal setting and saving combined with sound money management habits pave the way for solid financial health. Getting an early start with financial planning helps ensure you’ll enjoy more of the things you want today and for many years to come.
Roberta Pescow, NerdWallet
This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation. Christian Community Credit Union is an Equal Housing Lender.
This article was updated 12/30/16 for accuracy of links.