Financial advice for recent graduates - WDRB 41 Louisville News

Financial advice for recent graduates

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Five Pieces of Advice for Recent Graduates 

1. Create a budget. You can create a budget on an Excel spreadsheet or even on a plain sheet of paper. Google Docs has several free applications, including an online spreadsheet that you can use as well. Write down all of your anticipated sources of income and expenses. Expense items might include rent, student loans, car payments, food, gas, savings and any other recurring items that will result in outgoing cash. Next, list all of your anticipated sources of monthly income, including salary, wages, and any other source of income that you can reasonably anticipate. Add up your total income and then subtract your total expenses. Track your monthly spending on an ongoing basis so you can identify areas where you are spending too much money.

2. Get health care coverage immediately. While in college, you might still be covered by your parents' health care insurance plan. But after graduation, you'll have to make plans to secure your own coverage. With the skyrocketing cost of health care, one of the single greatest benefits of working for a corporation is the health and medical benefits. Going without coverage could have a devastating effect on your finances if you have a severe illness or accident. Be sure to secure that health care coverage for yourself as soon as possible.

3. Pay off your credit card debt. If you have credit card debt coming right out of college, it should be one of the first things that you deal with financially. When deciding on which debts to pay off first, you should prioritize paying down the debt by interest rates. In other words, the debt with the highest interest rate should be the first one that you pay back, paying down each balance in order with the highest interest rates first. If the interest rate on your credit card balance is high (16% or higher), you might consider a 0% balance transfer. Typically, you can get 6 to 12 months interest free to pay down that balance, but once you get that credit card debt paid down, always pay your balance in full each and every month.

4. Consider consolidating your student loans. After paying off that high interest credit card debt, you might want to consider consolidating your loans if you have several large balances spread out across a number of different lenders. Consolidation is not a good idea if you can afford to pay off those loans quickly - simply paying them off will be your least expensive option. While requirements for qualification are pretty strict, consolidating can help you lock in a low interest rate with only one lender and one payment to make. Whatever choice you make, start by putting a plan together to start paying those loans down right away.

5. Pay yourself first. One of the oldest financial planning rules in the book is to "pay yourself first." After you've successfully built up your rainy day fund, create some additional savings goals (down payment on a house or a new business start-up, for example) and pay yourself first -- before anyone or anything else. Remember, your rainy day fund is separate from these additional savings goals - and untouchable until that rainy day arrives. Socking away an additional 5 to 15% of your paycheck is a good place to start paying yourself first. You can adjust that rate accordingly but you should always be saving an additional portion of your income (over and above your emergency fund) no matter what your financial situation might be.

Lamkin Wealth Management
5151 Jefferson Blvd., Suite 102
or
6010 Brownsboro Park Blvd Suite A
office: 502-961-6550 Office
toll free: 866-961-6550
www.marktlamkin.com

"Securities Offered Through LPL Financial, Member FINRA/SIPC and an Investment Advisor"

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