Around this time of year, many recent college graduates are settling down into their first full-time jobs and getting their first taste of life on their own paying bills, shopping around for credit cards and insurance, and trying to pay down student loan debt.
With so many bills to pay, many young people can feel overwhelmed. Thats not surprising, given the fact that the average graduate from the class of 2009 holds $24,000 in student loan debt. Future students and alumni can expect this to rise in the coming years, as this type of debt rose by six percent from 2008 to 2009 alone.
For many young people who are interacting with major lenders and credit card companies for the first time, its important for them to understand that, as in many other areas of life, a first impression can be a valuable one.
Those who choose to let their bills go delinquent could end up hurting their credit histories. While this may not seem like a big deal to someone whos already struggling with a variety of bill payments, bad marks on credit reports often lead to lenders assessing them as increased risks.
This can mean higher interest rates on credit cards, home mortgage payments, and even insurance later in life, and can also lead to credit score damage in the short term.
Another aspect recent graduates may want to consider is developing a plan for their retirement.
Oftentimes, young adults will postpone saving for retirement because they want to get out of debt before they start to save, Matt Brandeburg, a certified financial planner, told The Philadelphia Inquirer. This is very idealistic, but not very practical. If we all waited to be debt-free to begin saving, very few of us would ever be able to retire.
Bradeburg tells the news source that young people could benefit by setting aside some of their earnings and putting it into savings accounts, investments, and retirement accounts. Its best to start early, because, by most analysts estimates, the average young person will need to save nearly $1.3 million in order to retire comfortably.
While this may seem like a daunting task to people struggling to get by on entry-level salaries, over time, and with a proper financial plan, young consumers will see that the money theyre saving now will eventually blossom into the necessary funds for retirement.
By making monthly payments consistently over time and building a strong credit history, consumers could even add more funds to their retirement accounts, as a good credit score can help individuals save thousands of dollars over the course of a lifetime.
Young people who invest wisely may be able to avoid the retirement issues that plague many elderly individuals today. In recent years, bankruptcy filings and credit card debt have hampered those over 65, forcing many to delay retirement and continue to work well into their golden years.