James Monette, assistant vice president and area manager for Workers Credit Union in Littleton.
Updated: May 15, 2023
10 Things
10 things I know about ... Financial literacy for college grads
By James Monette
1. Be practical. While you may be able to afford a higher car payment with your first job, do you really need the most expensive car?
Brand name and high-end items may have a draw, especially when you have an influx of money. However, many items work just fine as they are, and there is sometimes no need to spend money.
2. Differentiate between wants vs. needs. If you forgo spending $3.95 on a coffee and donut every day for 10 days, you will save $39.50. If you forgo it for 20 years, you can save $28,949. This is how you reduce your spending leaks.
3. Pay yourself first. Treat yourself like a bill and devote a portion of your salary for savings. This creates a rainy-day fund for life events out of your control.
4. Invest in insurance. Having insurance protects your finances. There are many different types of insurance you need, including health, dental, renters/homeowners, and auto. Insurance can alleviate future financial disasters.
5. Create a budget. Knowing your cash flow and organizing all your expenses and income will help you stay on top of your money and avoid unnecessary purchases. A good rule of thumb is to follow the 50/30/20 rule, allocating 50% of your monthly income to needs, 30% to wants and 20% to your financial goals.
6. Have a debt repayment plan. Those college loans may seem overwhelming. A plan for paying down loans creates small victories and makes progress.
7. Understand credit. It is important to understand your credit score, which is a number estimating how likely you are to repay debt. This number can fluctuate depending on your credit spending, number of missed payments, and length of credit.
8. Only open one credit card. With multiple cards, it is easy to get into financial trouble as it can lead to overspending.
9. Prioritize retirement early. As soon as you can save for retirement, you should. Your first job out of college is a great time to start. If your employer offers a 401(k) plan, enroll as soon as you can.
10. Keep learning. Have an open mind and be curious, and in return, you can master your finances. It’s important to feel comfortable with financial decisions. If you don’t understand something, don’t be afraid to ask someone knowledgeable you trust. It takes time to understand, but anyone can do it.
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