Top 7 Financial Decisions to Consider After Graduating High School
Graduating high school is a major life accomplishment. And with it comes some major life changes.
“When you graduate high school, you’re faced with some of the biggest financial decisions of your life thus far: Where do I go to college? How will I pay for school? Do I need to get a part-time or full-time job? How do I establish credit?” says Tony Rasmussen, vice president of public relations and financial education at Mountain America Credit Union.
“For many high school graduates, now may be the beginning of being on your own financially. So what should you know? For starters, open your own bank account, specifically a checking and savings account, if you don’t already have one. Next, set up a budget. If you don’t know how much money you’ll be bringing in and able to spend each month, it’s easy to go into debt eating out and shopping with friends every weekend. It’s important to learn how to responsibly use a credit card. Don’t sign up for a credit card just because they’re offering some cool promotion. Many cards doing this have high interest rates which can contribute to you spending more money than you actually have—resulting in higher debt. If you’re concerned about overspending on your credit card, there are several options. Choosing a savings-secured card, a card with a manageably low limit or a card to which a parent has access so they can help monitor your spending will help you learn to manage your money and build your credit responsibly. Another way to help build your credit if you have student loans or are renting is making your payments on time every month.”
Tony Rasmussen concluded that if there’s one thing to remember it’s to never be afraid to ask whatever financial questions you have.
Here’s a list to help get you started.
What should my budget look like?
One of the first things you should do after you graduate is take a good hard look at your budget. If you don’t have one yet, make one! Start by adding up any income you have, subtracting any bills you have, and then determining how much you can put into savings. Even if you don’t have a lot of income or a lot of bills yet, following a budget can help you establish good habits that will help you for years to come.
Need help getting started? Try one of these budget-building apps.
Is my bank account working for me?
As you examine your budget, consider the types of bank accounts you’re using.You’ve likely got a checking account for your money, but what kind of fees do you pay for it? You’ll also want to open a savings account and start making small, consistent contributions.
There are a number of options available, and doing a little bit of research can save you a lot of money in the long run.
Am I eligible for financial aid?
Is college in your immediate future? If so, now is a good time to secure any financial aid you can. Work with your school counselor, financial aid office, and preferred financial institution to find out what kind of grants, scholarships and loans you qualify for.
Do I need a job?
Whether you’re going to college, entering the workforce or traveling around Europe, now is a good time to consider if you need a job, and if so, what kind.
If you’re going to college, consider an on-campus job, or one you can work during the weekends to cover textbook costs and help pad your savings account. If you’re moving into your own apartment, you might want to find something that pays a little more than minimum wage so you can cover rent. If you’re taking time to travel, look into remote freelance gigs that let you choose your time and schedule.
Should I use a credit card?
A credit card can be a powerful tool in your wallet, but it can also cause a lot of trouble if you don’t use it correctly. Start by asking your parents if you can become an authorized user on one of their cards. This will help you establish credit responsibly.
If that’s not an option for you, find a credit card with a low limit and low interest rates. Start making small, regular charges to it — like gas or Netflix — and pay it off on time each and every month. Doing so will help you establish a strong credit score than will eventually help you get a car or home.
How prepared am I for an emergency?
You should never feel paranoid or anxious about the future. That being said, life happens. Having a small financial cushion for emergencies can prevent a lot of stress.
If you’re in college, for example, and need to get home to see a family member or friend — do you have enough money to drive or catch a flight home? Can you pay for roadside assistance if your car battery dies? Can you cover the copay for a late night trip to urgent care if you get a sinus infection and need antibiotics?
Again, there’s no need to be afraid. But putting a little aside for the unexpected is a smart move.
Should I save for retirement?
We know — retirement seems like a lifetime away from graduating high school. But it’s never too early to start saving. And every bit helps!
Consider opening a savings account — or a Roth IRA — and depositing a small amount into each every month. Even if you put away only $10 a month and increase your deposit every year, you’re helping ensure your security down the road.
Still have questions? Contact your preferred financial institution today. A team of financial experts is likely waiting to sit down and discuss your future with you.