Achieving Long-Term Economic Success After Graduating

[image: https://pixabay.com/en/graduation-teen-high-school-student-995042/]

Achieving Long-Term Economic Success After Graduating

While financial responsibility is an important issue at all ages, it’s once you’ve left school and entered the workplace that it becomes a priority. Financial literacy is a major problem, and it’s important to keep your finances under control with a view to the future.

Your financial plan will likely depend on whether you’re leaving school after high school, college, or grad school. You’ll have different considerations for each stage of your life, which means budgeting differently based on whether you're living at home, in dorms, or looking to get low cost renters insurance for your first apartment.

Regardless of your academic background, there are three main steps to creating sustainable financial success. You first need to build a budget that takes into account income, expenditures, and savings. You’ll also need to become familiar with various financial products and craft a long-term savings plan.

The earlier you start focusing on financial responsibility, the more you can set yourself up for future success.

Budgeting After High School
Whether you’re planning to continue to college or join the workforce, it’s important to start budgeting responsibly after high school. The easiest place to start when building a budget is looking at your income and expenses.

It’s common to adopt a 50/30/20 plan, which means 50% of your income should go to necessities, 30% to discretionary spending, and 20% to savings. And yes, savings are an expense!

While it might seem early, high school graduation is actually the perfect time to create a retirement account. The interest on this account will compound over time, so the earlier you can start putting money into it, the more money you’ll end up with. Your future self will thank you!

Budgeting After College

Many of the same concepts apply to budgeting after graduating from college, but it’s common for graduates to come out of school with student loans. These debts need to be reflected in their financial decisions.

The average college graduate leaves with nearly $40,000 in student loan debt. It’s important to pay all loans off as soon as possible, especially those with higher interest rates.

If you ever have extra money, consider putting some of it toward prepayment on your loans. Doing so will help lower future payments. Just like savings, student loan payments should be built into your budget, not considered as an extra or discretionary expense.

Budgeting After Grad School

In addition to likely having significantly higher student loan debt, grad school alums are likely to be interested in more major financial decisions. This can include investments in cars, homes, and businesses. Using a credit card and making payments on time throughout college will help you build credit and take out loans for these future expenses.

While these concepts are important to learn early and apply in all aspects of financial life, they are flexible and don’t apply perfectly to every situation. 20% of your income is a good, general savings goal, for example, but there will likely be times at which you can afford more. On the other hand, there will be other times when you won’t be able to reach that number.

By learning more about financial decision-making, you’ll understand how to notice these issues and take control of your own financial life.