By Lynn Brenner
NEW YORK May 1 Congratulations to the class of
2012 - you face an improving job market.
Employers say they'll hire 10 percent more new graduates
this year than they did in 2011, according to the National
Association of Colleges and Employers, so you may get a decent
But landing that job isn't the only piece of the money
puzzle. There's a slew of money moves you should be making now.
Here's a post grad to-do list.
1. Get health insurance. Sure, you're young and healthy, but
an uninsured accident or appendectomy could crush your finances
for years. The Obama health care law lets you stay on your
parents' insurance plan until you're 26 - even if you don't live
with them and you aren't their financial dependent - as long as
you're not eligible for a policy at your job.
If your parents' plan isn't an option, look for alternatives
at eHealthInsurance () and the
federal government's health resource website
"At the very least, get a catastrophic plan so you're
prepared for a serious accident or illness," says Beth Kobliner,
author of "Get a Financial Life," a personal finance book aimed
2. Learn to budget. That first paycheck will feel mighty
big, but it's got to cover a lot of expenses, says Sheryl
Garrett, a Kansas City financial adviser and founder of the
Garrett Planning Network of fee-only advisers.
You'll find great free budgeting tools at Mint ().
The downside: Advertisers see your personal financial data. For
privacy, buy personal finance software like Quicken. You can
jump-start your frugal lifestyle by living with your parents for
a few more months and brown-bagging your lunch.
3. Find a better bank. Comparison shop for banking services
at sites like Bankrate () and
Monthly fees can decimate an account too small to meet
minimum balance requirements, so look for institutions that cut
you a break if you opt for direct deposit of paychecks or agree
to skip the branch visits and bank online. Include credit unions
in your search; their fees often are lower and their rules are
now so liberal you're almost certainly eligible to join one.
4. Start saving automatically. Most financial advisers
recommend an emergency fund that equals three to six months of
your living expenses. Sound hard? It's easier with an automatic
savings plan: Ask your employer to transfer money from each
paycheck to your savings account, or arrange for your bank (or a
money market mutual fund) to automatically pull money from your
checking account every month.
5. Organize your debt. As many as one-third of college
graduates miss their first student loan payments, which are
typically due after a six-month post-graduation grace period.
That may be because they've moved without alerting lenders to
their new address, says Mark Kantrowitz, publisher of
Finaid.org, an informational website. "But payments are due
even if you don't receive a bill," he says.
His advice: Make a list of your student loans now, notify
the lenders of any change of address, and put a heads-up on your
calendar a few weeks before payments are due. Better yet,
arrange to have payments automatically debited from your bank
account. That may shave your interest rate, too.
Consolidating your loans makes you less likely to miss
payments, but it won't save you money. Kantrowitz says rates are
actually likely to rise slightly when you pool your loans.
6. Manage all your debts. If you can't yet afford payments,
call the lenders and ask about options like temporary
suspension, deferment or forbearance. (The downside: Interest
continues to accrue on suspended payments and is added to the
loan balance.) With federal loans, you can reduce payments by
stretching out the term of the loan. "Your monthly payment drops
34 percent if you extend a 6.8 percent loan from 10 years to 20
years, but your total interest more than doubles over the life
of the loan," says Kantrowitz.
After you get a job, find out if you're eligible for the
government's Income-Based Repayment plans (), says Kobliner. "IBR is based on what you earn rather than
what you owe. If you qualify, it can save you thousands of
dollars over time."
The average student with loans also graduates with $4,100 in
credit card debt, says Kobliner. "Ask your credit card company
to drop your interest rate, or find a lower-rate card on
NerdWallet ()or BillShrink
() and transfer your balance."
7. Build your credit file. Your credit score is based on the
information in your credit report. Get a free copy of your
credit report at the government-mandated site
AnnualCreditReport. () and
follow the site's directions to correct any errors in it.
It's smart to use a credit card as a convenience and to pay
the balance in full every month. "Your goal should be to use
credit wisely, not to avoid using it," says Anthony Criscuolo, a
Fort Lauderdale, Florida, financial adviser. "Your credit report
is like your financial resume, and you always want experience on
8. Max out tax breaks for long-term savings. "If you have a
401(k) plan with an employer match, between you and your
employer you should try to save 10 percent of your salary," says
Garrett. "If you do that from your first job to retirement,
you'll be set."
If you don't have a 401(k) plan, Garrett advises saving in a
Roth individual retirement account.
Finally, you can collect tax breaks for socking away money
for graduate school by using a 529 college savings plan. After
all, you may be headed back to school before you know it.