Here’s a quick lesson in financial education. Step one: Address your student debt. Yes, it’s painful, but do it anyway. The sooner you get rid of this burden the better you’ll feel. Go to the lender’s website and sign up for an automatic withdrawal from your checking account. A good start is to devote 10 to 15 percent of your income to retiring your debt.
Next, start saving. First, you’ll need an emergency fund. The job market can be dicey for new grads. Stash a few bucks in a savings account to help carry you through any periods of unemployment. Next, open a retirement account. Yes, you are young now. But someday you won't be. Put a few dollars a month in a Roth IRA now and you’ll be pleasantly surprised at how much serious coin you’ll have at age 65. For the same reasons, if your employer offers a 401(k), sign up for it. Yes, it’s fine to have two retirement accounts. Two is better than one.
Part of being a responsible adult is knowing what not to do. Don’t use credit cards very often. As a young adult, your card will likely have an outrageous interest rate. Big credit card debt plus big interest charges equals credit rating chaos and general financial disaster. Along the same lines, resist the urge to splurge. Think twice about taking exotic vacations or buying an expensive new car. Tahiti isn’t going anywhere, and they’ll still be making fancy BMWs in a few years, so it’s better to make sure you’re on sound footing with your other financial priorities before you cut loose.
OK, you’ve got the big picture. Class dismissed for the day. Your assignment is to go out into the world and work toward a more rewarding future.