As you prepare to enter the real world, it’s normal to be concerned about possible financial challenges that lie ahead. Towards the end of my senior year as a DI athlete, I was excited for my new chapter, but also so a little worried now that the real world was fast approaching. I had questions like:
- ‘What will my first full-time salary look like?’
- “Should I prioritize saving my money to move out, focus on investing, or something else?”
- “Even without student loans, I’m starting at $0. How will I be able to afford an apartment, food, entertainment, etc.?”
From managing loans to finding a job in a competitive market, there are many factors that can cause stress and uncertainty. However, by identifying concerns and by planning ahead, you can give yourself better piece of mind and set yourself up for financial success in the future. Here are 15 financial topics that might worry college graduates, along with tips on how to prepare for them.
15 Money Challenges New Graduates Might Face
• Student Loans: Not all former athletes obtain a full scholarship as an undergrad. The same goes for athletes who decide to pursue their masters degree. If you have student loans, make sure you understand the terms of your repayment plan and explore options for refinancing or consolidating your loans to lower your monthly payments.
• Job Market: Finding a job in a competitive market can be challenging. Start networking early, attend job fairs, and consider internships or volunteer work to gain experience and make connections. Don’t be afraid to take a low paying job (if you can afford to) that can help you get your foot in the door. Right out of school I wasn’t as prepared for my career as I wanted to be. I applied to jobs online, attended career fairs, and eventually secured an entry level job making cold calls with the New Jersey Nets. Despite the initial low pay and minimal benefits, taking this role helped launch my career.
• Housing Costs: Whether you plan to rent or buy, housing costs can be a major expense. Consider living with roommates to split costs, or explore alternative housing options like co-living spaces. If you are able, consider moving back home. This might feel like a huge step backwards after living on campus or in your own on-campus apartment, but you’ll be able to save up so much money. Spending a year or more living with your parents can help you build a savings account and allow you to figure out your next professional steps.
• Healthcare Costs: If you’re no longer covered under your parents’ health insurance plan, you’ll need to find your own coverage. Research the options available to you, including employer-sponsored plans or plans through the Affordable Care Act marketplace.
• Credit Card Debt: High-interest credit card debt can quickly spiral out of control. Create a budget and stick to it, and consider using a balance transfer or consolidation loan to lower your interest rates. Having credit card debt is one of the worst financial feelings I’ve had, especially when your hard earned money has to go into paying off your credit cards plus interest. Monitoring your expenses and establishing spending habits that keep you out of debt is the way to go.
• Retirement Planning: It’s never too early to start saving for retirement. If your employer offers a 401(k) or similar retirement plan, take advantage of it, and consider opening an individual retirement account (IRA) as well. While it might seem so far out, having a retirement fund that grows as you get older can help you to benefit from compound interest. I’ve enabled automatic deductions to contribute to my retirement fund each time I get paid. The ‘set it and forget it’ method really helps me save each time I get paid.
• Emergency Fund: Having an emergency fund can provide peace of mind and help you cover unexpected expenses. Aim to save at least three to six months’ worth of living expenses in a high-yield savings account. That might be a lot of money, so start small by increasing your savings goals over time. Start by saving a weeks worth of groceries, then 2-3 weeks worth of expenses, then one months’ rent, etc. With discipline, it is possible to grow your savings account.
• Budgeting: Creating a budget and sticking to it can help you manage your money more effectively. Track your expenses, identify areas where you can cut back, and prioritize your financial goals.
• Taxes: Understanding how taxes work can help you maximize your deductions and minimize your tax liability. Consider working with a tax professional or using tax software to ensure you’re filing correctly.
• Insurance: Auto, renters, and health insurance are important to protect yourself and your belongings. Shop around for the best rates, and make sure you understand what is and isn’t covered.
• Investing: Investing can be a great way to grow your wealth over time. Educate yourself about different investment options, and consider starting with a low-cost index fund. Kurt and I were able to cash out our investments and use a portion of those funds towards a down payment for our first home. We weren’t day traders, instead, we bought shares in companies and brands that we knew and liked. Over time, the value of those stocks grew and we cashed them in when it was time to invest into our starter home.
• Credit Score: Your credit score can affect your ability to get a loan, rent an apartment, or even get a job. Check your credit report regularly, and take steps to improve your score if necessary.
• Negotiating Salary: Negotiating your salary can have a big impact on your financial future. Do your research, and don’t be afraid to ask for what you’re worth. Negotiating can feel super overwhelming, especially if you’re new to the job market. The way I see it, you can always ask- the worst answer you can get is ‘no’. If a salary negotiation isn’t possible, try negotiating for other benefits like time off or a more flexible schedule if your job isn’t fully remote.
• Paying Off Debt: If you have debt, prioritize paying it off as quickly as possible. Consider using the debt snowball or avalanche method to pay down your debt more efficiently. Right after our wedding, Kurt and I were saddled with a lot of debt pretty quickly. Instead of giving up, we set up a plan, and chipped away at our debt consistently until it was paid off. We made lifestyle sacrifices such as eating most of our meals at home, we reduced our budget, and cut unnecessary items from our spending so that we could focus on paying off our debt.
• Financial Planning: It’s never too early to start planning for your financial future. Consider working with a financial planner to create a comprehensive plan that takes into account your goals and priorities. A good financial planner can work with you and help you tailor a plan that helps you meet short-term and long-term financial goals.
One thing I wish my current self could tell my past self is: you don’t need to learn it all at once. Understanding how money works, financial terms and more takes time, and sometimes that means learning by example. Start by learning about a topic you’re interested in, and go from there. Trying to master every financial term and topic at once could lead to you feeling discouraged and disinterested from mastering one or more financial topics. Being proactive can help you can set yourself up for a successful financial future as a college graduate.