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Financial Advice for Recent Grads

May 12, 2010

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Congratulations! You made it through college and scored your first “real world” gig. But your work’s not done just yet.

Though it may seem like light-years away, it’s never too early to start saving for the purchase of your first home or your retirement. The sooner you get yourself on track to financial security, the easier it will be to achieve the life you want. Luckily, there are things you can do in your 20s that can help make buying a house or retiring financially feasible.

First of all, give yourself some credit. Literally. Maintaining a good credit score will help you secure a better interest rate on a home loan and lower your monthly mortgage payments. Just be honest with yourself about whether or not you’ll be able to stay on top of your credit payments, as defaulting on your credit card debt will have the opposite effect. And remember – student loans and car payments factor into your credit score as well.

Next, be sure to take advantage of the financial benefits your new employer may offer, such as a 401(k) plan or stock options. Often employers will match your 401(k) contributions, which means you’ll get paid just for saving your money. And because many of these plans charge penalties for withdrawing your money too early, it will incentivize you to keep it in your account so it can continue to grow interest.

Lastly, resist the urge to live beyond your means. Your paychecks are most likely more money than you are used to managing. Be wise with how you spend it and make sacrifices when you can. If you’re itching to live in a nice apartment, consider going in on a place with a roommate who will help lessen the costs. Also, look for an apartment building with a gym, which is a great way to cut down on membership costs.

When it comes to savings, too much is never enough. By putting your purchases in perspective and being wise with your investments, you are doing yourself a huge favor. The smart financial habits you develop today will help you prepare for the future.

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