With employers like Under Armour and Johns Hopkins headquartered in Maryland, there is plenty of economic opportunity to be found here. However, making it as a college grad on a tight budget can be challenging here due to Maryland’s high cost of living. The key to living on an entry-level budget in Maryland is careful financial planning. Keep reading to explore our best financial tips for young adults.
1. Set a budget
Last-minute cramming may have worked for your freshman-year economics class, but it won’t help you stay afloat financially. When it comes to budgeting in post-grad life, it’s best to set a budget and stick to it.
Here are a few pieces of advice for budgeting after college:
Identify your financial goals. Do you want to focus on saving for a down payment on your first home, paying down your student loans, or getting an early start on your retirement savings?
Allocate your money accordingly. Consider following the 50/30/20 rule, allocating 50 percent of your budget to necessities 30 to wants, and 20 to savings.
Don’t forget to have fun! Saving for your long-term goals is important, but don’t let that keep you from enjoying a few of your favorite hobbies now. When creating a budget, be sure to factor in things you want to do like trips or nights out with your friends.
2. Get creative with saving money
There’s no denying that living on an entry-level salary can be challenging, especially when you consider that college graduates in Maryland have some of the highest student loan rates of any grads in the country. To make it more manageable, find creative ways to reduce your spending. You might consider living with your parents for a while to avoid taking on a large rental payment or splitting living expenses with a few roommates to make it more affordable.
Additionally, have a plan for paying for big purchases. Whether you’re saving for a new desk to build the perfect work-from-home setup or a summer trip with your college friends, set money aside for these kinds of high-cost expenses. Often known as a sinking fund, this is a savings account that you allocate money towards to help pay for larger expenses, so you avoid putting them on a credit card.
3. Build good credit
Young adulthood is a great time to start building good credit habits. Avoid taking on too much debt, and pay off credit card debt immediately to avoid carrying a balance. Maintaining a low debt-to-income ratio and making payments on time will ensure you have a good credit score. A good score will be essential when you’re ready to buy a house or a new car.
Even when you’re not using you’re credit card to make purchases, we recommend getting into the habit of checking your credit score frequently. Building this habit will help you not only monitor your progress but also check for potentially fraudulent activity.
Check out our credit cards for recent grads. Our starter and secured credit cards give you the opportunity to grow your credit score while keeping your credit limits low.
4. Get a clear picture of your student debt
After graduating college, you typically have a six-month grace period before you’re required to start repaying your student loans. That time will pass by before you know it, so it’s important to have a plan in place for repaying your student loans before the first bill arrives.
Once the graduation glow wears off, take stock of your student debt. Make sure you know everything about what type of loan you have and how much money you owe. Then, take a look at what opportunities you have to reduce your debt burden. Depending on your income, career, and debt-to-income ratio, you might be eligible for opportunities to refinance your loans for a lower rate or apply for payment plans.
To make your student loan payments more manageable, find out if you qualify for any of these opportunities:
- Income-driven repayment plan: enables you to pay a rate that is affordable to your income
- Debt consolidation: combines multiple loans into one to get a fixed interest rate
- Refinancing: takes out a new loan to pay off your previous loan – at a lower interest rate
Explore refinancing opportunities with SECU.
5. Start growing your investments
Even if you don’t have much money to spare, now is the time to ensure you understand the basics of investing. From stocks and bonds to the many different types of retirement plans, get familiar with how each of these opportunities can impact your financial future. As your income grows throughout your career, you can make decisions that allow your money to work for you.
Most importantly, start saving for retirement. Not sure where to start? Focus on your employer. When job hunting, be sure to weigh your retirement benefits. Look for companies who offer to match your 401k contributions, and take full advantage of it. The sooner you start building your nest egg, the better off you’ll be later on. If you don’t have access to an employer-sponsored plan, start saving for your future with an individual retirement account.
Build a strong financial foundation with SECU
If job hunting is your number one priority post-college, then budgeting should be your second. From deciding where to live and what job to take, you have a lot of big decisions waiting for you following graduation. SECU can help set you on the path to financial success as you enter this next chapter in your life.
Schedule a free financial wellness checkup to get expert advice for college graduates. Walk through your full financial picture with our highly trained expert and get assistance with budgeting as you prepare to repay your student loans.