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10 ways for college graduates to build a financial future

Preparing for life after college? Consider these tips for getting started on the right foot financially.

May 16, 2017
Jay Messing of Wells Fargo Private Bank
Jay Messing

Jay Messing is the senior director of wealth planning for Wells Fargo Private Bank in the Northeast.

It’s that time of year when college graduates march to the tune of “Pomp and Circumstance,” walk across the stage, and receive their degrees. This is also the time when those new graduates have a lot to think about: student loans, monthly living expenses, and the new jobs or further education or training that await.

Here are some tips to help graduates succeed financially in this next phase of life:

Live below your means.

If you can maintain a frugal college student mindset for a few years after starting your first job, you’ll be amazed how much you can save and invest.

Create a realistic budget based on what you can afford — and stick to it. Apps like Daily Change can help you set goals and take steps to save money. You can also visit Wells Fargo’s online financial health resource to see how small changes help create healthy financial habits that can add up.

Set money aside for emergencies.

Set up a separate bank account — containing enough money to cover three to six months of basic living expenses — as your emergency fund. Although it may not feel like it, it’s surprisingly easier to accumulate this cushion now, when you have fewer financial commitments, than at any other time in your life.

Speaking of emergencies, sign up for disability insurance if it’s offered by your employer.

Start saving for retirement with your first paycheck.

Retirement may be the last thing on your mind as you start your first job, but if you don’t take advantage of your company’s retirement plan, you may be giving up an opportunity for free money. Starting to save early can help you benefit from the power of compounding, and can make a big difference in the income you have available to support your lifestyle in retirement.

Most companies offer 401(k) plans with some level of matching contributions. At a minimum, you want to try to capture the full matching amount. Save at least 10 percent of your income or more (including the company match). Do what it takes to save as much as possible, even if that means living with mom and dad or riding your bike to work.

Create separate savings accounts for large purchases.

Sometimes large purchases are necessary. Plan for these — and save for them in advance. Never withdraw money from an investment account to buy a consumer product.

Keep credit card balances low and pay them off in full.

Debt can accumulate quickly. Use tools like Wells Fargo’s My Spending Report to analyze your saving and spending habits. Understand your credit score and how credit works, and review your credit report at least once a year to check your score and look for mistakes.

Borrow prudently.

Take out a loan only for purchases that will likely appreciate over time, such as real estate, or for necessities like a car for transportation to work. Avoid borrowing for items such as clothes or furniture, which lose value before the first payment is made.

Be a smart car shopper.

Before you buy a car, consider its resale value and the total cost of ownership. New cars depreciate the moment they leave the lot, so they might not be the right financial choice for many car shoppers. You’ll often find that a used car with low miles and remaining warranty coverage offers better value than buying a new car.

Start investing when you receive unexpected money.

You might find yourself experiencing an “in the money” moment where you receive money you weren’t expecting and don’t need for your basic living expenses. These moments — tax refunds, bonuses, raises, and holiday gifts, to name a few — are great opportunities for you to start investing. The more you invest now, the more you’ll be able to grow those assets later.

Talk to a financial advisor or planner.

Investments do typically have some measure of risk, so it’s important for first-time investors to understand their tolerances for fluctuation. Consider meeting with a financial advisor or planner to develop a plan that can become your financial road map for the next several years.

Reward yourself with one modest purchase.

Getting that first full-time job is cause for celebration. Treat yourself — just don’t go overboard.


Wells Fargo Private Bank provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries.

Insurance products are offered through nonbank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.

Investment and Insurance Products: NOT FDIC-Insured/NO Bank Guarantee/MAY Lose Value.

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