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8 money lessons for new college grads

The best present for any recent grad is — surprise — a little more education. But not the kind found in a textbook. Here's a crash course in Money 101.
/ Source: DailyFinance

After "Pomp and Circumstance," commencement speeches, congratulations, champagne and celebrations, comes life. College grads who get off to a good start can build solid foundations for their financial futures.

Given that, the best present for any recent grad is— surprise — a little more education. But not the kind found in a textbook.

Here's a crash course in Money 101.

Lesson 1: Make money
Work hard at getting the best "first job" you can to help you meet your needs, whether they be financial, career aspirations or personal interests, advises Stacie Berdan, author of "Get Ahead By Going Abroad."

Learn the art of networking. Professors, deans and guidance counselors are all potential sources of referrals, job opportunities and references. "A good referral or reference can be the difference between being hired and remaining another resume on the stack," says Winnie Sun, founding partner of Sun Group Wealth Partners.

Be flexible. The job market, while better, is still less than healthy. You may not get your dream job, but any paycheck beats zero income.

If the market proves really tepid, don't rule out unpaid internships that provide valuable experience and contacts that can boost your job opportunities later. "Don't sit around and do nothing. Write a blog or start a YouTube channel, volunteer in your field, or use your expertise to help friends and family," says John Strelecky, author of "How To Be Rich and Happy."

Clean up your electronic footprint. "It's not cute for a future employer to find you guzzling beer or flashing your funny business on your Facebook wall," says Ken Kamen, president of Mercadien Asset Management. "More and more employers are checking online, so make sure that your social media sites would make your grandmother proud to show her friends."

2. Pay yourself first
Start saving immediately. Ideally, shoot to save 10 percent to 15 percent of what you earn, but even investing a small amount, say $25 a week, can have tremendous long-term impact, especially when you're in your 20s and your money has decades to reap the rewards of compounding.

Make it easy on yourself. Have money automatically taken from your paycheck and deposited directly into savings.

3. Throw whimsy out the window
You're a grownup now. The days of "winging it" are over. Develop a plan for your spending early on. Determine how much you will need for rent, groceries, and other expenses. "Once you begin receiving a paycheck, it will likely be more money than you've ever had, but it can be very easy to quickly wind up with the cash slipping away without a clear idea of where it has gone," says Bill Druliner, a counselor with GreenPath Debt Solutions.

Track expenses and if you find yourself blowing your budget, make adjustments immediately in your spending.

4. Buy strategically
You know all about Groupon, but the deals don't start and end there. Clipping coupons isn't just for little old ladies. Invest time online and off, to get the best deals on everything from groceries, household items to entertainment.

Study up. You'll also need to investigate things you never thought much about before such as health insurance. Because you're young and relatively healthy, it might be relatively inexpensive to purchase health insurance yourself. With health care reform, reminds Carrie McLean, an insurance specialist with eHealthInsurance.com, you can retain coverage under your parents' health insurance policy until you're 26. However, "Break out the calculator. Find out how much it costs your parents to keep you on their policy and compare that with quotes from health insurance companies in your area to see if it makes more sense to buy coverage on your own," says McLean. You may also get coverage through your employer.

5. Be patient
Forget what it was like to have the Bank of Mom and Dad. Learn to wait for what you need.

Instant gratification feels good, but long-term is detrimental to your financial health. "It's an expensive affliction," says Darrell Canby, president of Canby Financial Advisors.

Live within your means. "Do not buy anything unless you have the cash to pay for it in the bank," says Katherine Liola, an Ameriprise financial advisor. Furthermore, she says, "Do not buy a car or any large purchase that will prevent you from saving and achieving your goals." A 3-year-old car with low mileage is a better deal than buying new, notes Bill Martin, a certified financial planner with MassMutual.

Consider delaying getting your own apartment, and instead stay with old roommates or at home. Then, bank all the money you would have spent flying solo. You might even put off grad school to give yourself time to build work experience and financial girth.6. Respect debt
You once thought SAT scores were important. Now, there's a new number you should hold sacred: your credit score.

While a FICO score in the 700 to 850 range wouldn't have gotten you into an Ivy League school, creditors love those numbers. They say you're fiscally responsible.

Don't get in the habit of whipping out credit cards. If you won't be able to pay the balance in full when the bill arrives, don't charge, because that's probably your best clue that you can't really afford the purchase. And when it comes to credit cards — as with everything else — shop for the best deal. You can start your research with the latest report on the best credit cards for new college grads from CardRatings.com.

Treat your student loans seriously. That $20,000 on average that students have in student loans must be paid back. Honor that commitment and if you don't have a job lined up, contact your student loan provider immediately to ask for a six-month deferment. Most lenders will do this right after you graduate without much difficulty.

"The last thing you want is to start getting negative marks on your credit right away for not making student loan payments on time," Druliner says.

Pull a free credit report from annualcreditreport.com, review it, and make sure you are aware of all of your existing creditors. Know too, that a poor credit report might lead potential employers to take a pass on hiring you.

7. Invest for retirement
You've barely finished displaying your shiny new diploma, so retirement may not be at the top of mind — but it should be.

"The best time to start planning for retirement is the day you start working," says Canby. If a 21-year-old invests just $2,000 a year for 10 years, at 10 percent interest by age 65, that sum of money would grow to $895,761, Canby says.

Participate in your employer-sponsored retirement plan as soon as you are eligible. Contribute at least enough to qualify for the full amount of the employer's match if it offers one.

8. Know what counts most
You're still somewhat wet behind the ears, no one expects you to have everything figured out, but you should have a game plan of sorts. "You have to know your values and goals so that you can make decisions in all aspects of your life that are aligned with your goals," Liola says. "This applies to the type of jobs you apply for, to how you spend your money," she adds.

Think short, medium and long-term goals. Each goal should be specific, with activities listed for each of your goals.

You worked hard to earn your degree. Work just as hard on managing your money and the smart choices made today will pay off for years to come.

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