TUCSON, Ariz. — For those who just graduated college, are you thinking of your finances? Financial advisers say you should be.
You want to start building your budget. Cut out frivolous purchases and start thinking about where you see yourself financially in the next few months.
"The concept I want folks to understand is progress, not perfection. We want to say, 'Where am I now? Where do I want to be in a month, in six-months, in a year?' Knowing that there is a huge impact that all of this will have on your future. 'Do I want to buy a home, do I want to buy a new car?'" said Todd Anderson, the managing partner of Anderson Financial Group.
If you have student loans, you may have gotten mail asking you to refinance. However, you want to be careful with who with refinance or consolidate with, especially if you are interested in having your loans forgiven in the future.
"Right now there are programs in place that are federally-backed student loans that once you have those in place, and you make payments for 10 years, those loans can be forgiven. Well, the problem that happens is that after a few years into this thing and you get one of those letters from one of the outside, private lenders that wants to refinance your loan. You look at it and see a lower interest rate, lower payments, and you take the deal. But what you've just done is you've given up your forgiveness option," said Anderson.
In addition, its never too early to think about retirement. If you have the opportunity to get into a Roth 401(k) or a Roth IRA, Anderson said, do it.
"The reason for that is you're going to pay taxes on that money now, but its going to come out tax-free. The only rub on that is on Roth 401ks, if your employer is making a match, then that match will be taxable when it comes out. So that's kind of the number one rule, if you're with an employer that offers a retirement plan and they offer a match, you want to always do what you can to maximize that matching contribution. Otherwise, you are leaving free money on the table," said Anderson.
Anderson said budgeting, tackling your loans, and thinking about retirement are the main ways you can start to set your finances up for success after graduating.
