10 STEPS TO FINANCIAL SUCCESS FOR NEW GRADS

18 May 2009 5:35 p.m. Eastern
Credit Union National Association, Edited by Resa Hodnett

The financial decisions you make immediately after college graduation will have a big impact on your future. Since you're in your 20s, you have a financial asset money can't buy—time. And time makes your money grow. Here are 10 steps you should take to make sure you're headed in the right direction.

1. Match cash income and outflow. List all debts and expected expenses then make a budget. Limit debt to your ability to repay.

2. Set goals. Make a list of goals you want to reach within the first six months after graduating. Put your goals in writing then calculate how much you'll need to save each month to reach them. Measure achievements along the way and change goals as your career advances.

3. Start paying off student loans. Figure out how much you owe and how much you can afford to pay each month. Lenders recommend payments not exceed eight percent to 10 percent of gross monthly income.

4. Manage credit card debt. Pay off outstanding debt and make subsequent payments on time. That way, you can build a good track record to qualify for the best mortgage and auto loan rates by the time you're ready to buy a house, condo or car.

5. Decide where to live. Housing likely will be your biggest expense so make sure you can afford the monthly payments. Consider finding a roommate.

6. Decide if a new car is feasible. Make sure you can afford the payments as well as the insurance.

7. Get into the habit of saving money regularly. Using direct deposit and payroll deduction can put savings on autopilot. Build an emergency fund equal to three to six months' living expenses, even if it takes years to build. Use this fund only for true emergencies, such as unexpected car repairs, illness or unemployment.

For guidance on savings vehicles—IRAs, share certificates and more—and their benefits, contact a PEFCU financial specialist at 800.627.3328 or 765.497.3328.