Graduating from college often marks a time in life when young adults take on responsibility over their finances. If you’re the parent of a recent graduate who you’ve supported financially through college, you may be looking forward to passing the torch to them – but you may also want to help them get off on the right foot. Here are some tips you can pass along:
Study your employee benefits. For many recent grads, this is the first time they’ve been offered a 401(k), health insurance or the chance to purchase additional time off. Before enrolling in benefits, graduates should thoroughly research and understand their options. Remind them that it’s okay to have questions, such as whether they should consider disability insurance or if a plan with a Health Savings Account (HSA) is the right fit. Their company’s human resources department or benefits provider may be good resources for information and support.
If they have questions specific to their financial situation, they could consider meeting with a financial professional. A financial advisor can provide objective advice and answers to more technical questions.
Have a plan for your debt and credit. Graduates today have more student loan debt than previous generations, which means balancing their post-grad lifestyle with student loan payments should be a top priority. They should consider the value of consistently paying above the minimum amount due. Establishing this responsible habit can help them avoid costly interest rate charges and late fees.
The same thinking should be applied to all forms of credit. It’s important for young adults to establish a good credit history, so opening a credit card can be a wise financial move. In general, however, it’s best to stick to one or two credit cards to avoid overextending.
Develop a budget. Remind your new grad that without careful planning, it’s easy for their hard-earned paychecks to trickle away. Creating a budget can help young adults feel in control and accountable for their cash flow. Budgeting, while often a mundane task, can help ensure their money is being spent on or saved for the items that are most important to them.
This is exciting time for graduates, but it’s also an important time to get the right financial discipline in place. Your guidance can help them build a solid foundation.
Edward Pontarelli Jr, APMA®, CRPC® is a Financial Advisor and Managing Director with BeaconPoint Wealth Advisors a financial advisory practice of Ameriprise Financial Services, Inc. in Providence, RI. He specializes in fee based financial planning and asset management strategies and has been in practice for 23 years. Please contact him at https://www.ameripriseadvisors.com/team/beacon-point-wealth-advisors or (401)824-2532, 1 Citizens Plaza Ste 610 Providence, RI 02903.
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