The Recent Graduate’s Guide to Real-World Financial Readiness

For many young adults, graduating from high school or college also means graduating into the “real world,” a step that brings not only fresh opportunities and welcome new freedoms, but also new responsibilities.

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Having a diploma in hand means your financial destiny is also now in your hands. And it’s not only about making money, but managing it, too. You have things in life you want to accomplish, places you want to go, dreams you want to fulfill. And taking charge of your own financial destiny gives you a much better chance of getting there. Leave it to chance and chances are you’ll find yourself further from your goals than you hoped, said certified financial planner Jeff R. Maas, CFP®, based in Sacramento, Calif. “The reality is, people who make an effort to manage their finances tend to come out ahead of people who don’t.”


When it comes to managing money, a little time and effort goes a long way. For most people, it’s a matter of just a few hours a month — no math degree or mastery of calculus necessary. Here’s all it takes:


1. Start with a spending plan. Tracking what you take in and what you spend your money on each month tells you exactly how much you need to set aside for necessary expenses — food, housing, transportation, utilities, school loan bills, etc. — and how much you might have left over for other things. Start at a site like for free budgeting apps and a site like for spending plan/budget worksheets and more.

2. Establish a safety net by starting an emergency fund, a savings account in which you keep enough money to cover at least three to six months of expenses. “It allows you not to have to call Mom and Dad or use credit cards,” explains Maas, “if there’s an emergency, such as if your car needs expensive repairs or you lose your job.”

3. Start saving for retirement — now.
People who start saving for retirement in their 20s have a huge edge over people who wait until their 30s or 40s, said Maas. “If you can save 10-15 percent of your income each year toward retirement, you should be set.” He recommends including a line item for retirement savings in your spending plan, and if your employer offers a retirement plan with automatic withdrawal, to take advantage of it. If that plan includes an employer match, be sure to take advantage of that, too; in terms of financial impact, it’s among the best benefits an employee can get.

4. Chip away at debt, and resist the temptation to add to it. Prioritize paying down credit card debt, urges Maas, while at the same time avoiding burdening yourself with unnecessary new debt. “I understand the desire to go out and spend money that if you graduate, get that first job and start making more money than you’ve ever made before. But taking on a lot of new debt can cost you a lot of money in the long run.”

5. Lean on friends, family members and/or a financial professional for advice and assistance. As a recent graduate, you’re smart, but you don’t know it all. “Talk to someone you know who’s financially responsible,” Maas suggests. “They are bound to tell you about things you haven’t thought of, and they can even mentor you, in a way. You’d be surprised how many people would be interested in sharing their insight with you.”

Along with free advice from friends and family, it’s worth spending a little money to consult with a certified financial planner, Maas adds. “The money you pay for one hour of a financial planner’s time, you’ll get back 50 times over. It’s certainly worthwhile.”

This column is provided by the Financial Planning Association® (FPA®), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.

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