Two things new graduates can do with their money post-college to set themselves up for financial success.
Originally published and written April 6, 2021 by Elizabeth Gravier
Edited for brevity & clarity by Gleba & Associates
With graduation season right around the corner, the class of 2021 is gearing up for what their lives will look like post-college.
As they prepare to enter the workforce, this period is a significant time marking the start of their careers. For new grads, it’s also an opportune moment to make sure they start off on the right financial foot. The money moves you make in your younger years can have a huge impact on what your personal finances look like for years to come.
For grads-to-be, here are two things you should do with your money to help build a strong financial foundation.
Spend your money wisely using a starter credit card
The purpose of a starter credit card? To help you build credit.
Your credit history – or the length of time you’ve had credit – makes up 15% of your credit store. So, the earlier you begin building credit, the better.
A good credit score will help you qualify for an apartment, as well as get lower interest rates on a new car loan or future mortgage.
Recent grads who have a very short credit history, or none at all, should consider opening a starter credit card, also known as a secured credit card. Similar to using a traditional – or unsecured – credit card, a secured card allows you to charge purchases against your credit limit and then you pay your balance off in full each month when your bill arrives.
The big difference between secured and unsecured cards, however, is that the former typically requires cardholders to make a security deposit upfront (usually $200) that is equivalent to their credit limit. This deposit acts as a form of collateral in case the cardholder doesn’t pay their bill each month, which is why they’re great for beginners as they learn how to use credit responsibly.
Another credit card option is to talk with your bank – many have options for students who have accounts with them.
If you have student loans, you can build credit by paying them off. Student loans are a type of installment credit, similar to car loans and mortgages, which means they show up on your credit report. The good news is that paying your bill on time each month will help your credit since your payment history is the most important factor in determining your score.
Graduates with student loans typically have a six-month grace period before they have to start repayment. After you begin paying your student loans, it may take a few months for them to appear on your credit report.
Save your money in a retirement account
Yes, it’s never too early to start saving for your nonworking years.
For recent college grads who score a job that offers a 401(k) or other company retirement plan with matching contributions, make sure you prioritize putting your money toward it. Otherwise, that is free money you are leaving on the table. If you can’t afford to meet the match, work your way toward it each year by upping your contribution.
Many companies offer two types of 401(k) options: pre-tax and post-tax. Often, for someone just graduating college, your tax bracket will be low and you can take advantage of a post-tax, or Roth 401(k). This allows you to pay taxes on the contributions today at lower rates, rather than at higher rates in the future. Contributing as much as you can to a Roth 401(k) can mean paying less in taxes in retirement.
For those recent grads whose first job doesn’t offer a company retirement plan, you should consider opening an IRA to ensure you are putting away a portion of your paycheck for retirement. There is a post-tax, or Roth, option for an IRA as well, so you can get the same tax benefits as contributing to a Roth 401(k).
Please come to us to discuss your options, as everyone’s situation is different.
Link to original article: https://www.cnbc.com/select/where-to-put-your-money-after-graduating-college/?__source=sharebar|email&par=sharebar
Invest Well. Manage Well. Live Well.
Gary is a Financial Associate at Gleba & Associates, Inc., joining our team in June 2020. After graduating from Walsh College with a Bachelor’s Degree in Finance in 2013, he began his career at Raymond James Financial Services. He then moved to the world of banking, working as a banker with Chase Private Client and then as an Assistant Vice President, Financial Advisor with PNC Investments. Gary has expertise in all aspects of financial planning including investment management, higher education planning, life insurance, and long-term care insurance needs analysis. When he gets away from the office, he loves to spend time with his wife, Lauren, and two daughters, Hadley and Harper. He enjoys woodworking, boating, summer weekends at the family cottage, spending time outdoors and traveling.
Conor is a Financial Associate at Gleba & Associates, Inc., where he started in 2018. Conor has prior experience in the financial planning industry, as well as in the insurance industry. His high level of understanding insurance and financial products helps him in assessing the needs of our clients. He holds a Bachelor of Science degree in Business Administration with a concentration in Finance from the University of Detroit Mercy. You can often find Conor playing soccer or walking with his two dogs Milo, and Ellie. He is also an avid follower of the Detroit Tigers, Detroit Red Wings and his alma mater, the University of Detroit Mercy Titans.
Lorie Heitzer is our Financial Associate at Gleba & Associates, Inc., where she has been a valuable employee for more than a decade! In her current role, Lorie assists with client reviews, implements client financial planning, and handles preparation of investment paperwork. During her time with Gleba & Associates, Lorie has earned her Series 6 (Investment Company Variable Contracts Representative), 63 (Uniform Securities Agent) and Life Insurance Licenses, allowing her to move into her current role where she assists clients in both of these areas. Lorie and her husband Bill, along with their daughters Lauren and Alexandria, and sons-in-law, Andrew & Joe, enjoy golf and make it a family event whenever possible. Her tenure at Gleba & Associates speaks volumes to her passion for the firm’s family atmosphere and her dedication to our clients and their financial and insurance needs.
Terri is the Service Manager at Gleba & Associates, Inc., Joining the team in April, 2015. In her role, she handles client service requests and underwriting. Terri’s previous experience in 401(k) Retirement Plans, Payroll and Human Resource Administration is invaluable, allowing Gleba & Associates to grow and run efficiently. This is knowledge that can also assist our small business clients as they grow their businesses. Terri enjoys spending time with family, which includes her husband, Gerry and her two children, Vincent and Genna. She loves the outdoors and camping with family in their RV. Terri looks forward to continuing the high level of customer service you have come to expect from Gleba & Associates!
Michael is the Marketing Manager at Gleba & Associates, Inc., where he began in August 2017. In his position, Michael creates and develops marketing strategies to enhance the image of Gleba & Associates, and helps maximize the Client-Advisor relationship. He is also in charge of company events, seminars, and educational workshops. Michael has a Bachelor of Applied Arts Degree in Integrative Public Relations from Central Michigan University. When he is not in the office, Michael can most likely be found playing billiards, playing poker, on the tennis court, or rooting on the Utica Unicorns baseball team. Michael stays active by going to the gym and going to the dog park with his Labrador-mix, Milton. His approachable attitude, along with experience in marketing, communications, and social media, makes him a valuable asset to the Gleba & Associates team.
Moiz is our Financial Associate at Gleba & Associates, Inc., where he began in 2013 after working for Bank of America and Thomson Reuters in various financial roles. In his position, Moiz assists in the research of financial solutions in order to meet client’s needs, conducts client reviews, provides insurance quotes, offers detailed financial plans, and delivers follow-up services to our clients. Before moving to the United States in 2004, Moiz grew up in rural India, where he was raised in a family of entrepreneurs. This allowed him to quickly learn the value of financial investment. Moiz holds a Bachelor of Commerce Degree in Accounting from Gujrat University and a B.B.A. in Management and an MBA from Walsh College of Accountancy and Business Administration, where he was elected as a member of Delta Mu Delta, the International Honor Society in Business Administration in recognition of high scholastic attainment. Moiz enjoys spending time with his wife, Tasneem, son, Taha, and family. He also loves playing tennis and rebuilding computers. His expertise in the areas of banking, mortgage and taxation helps to provide our clients with distinct portfolio advice as well as overall financial direction and growth.