Financial Success After High School, College and Grad School

June 16, 2016 | Steve Hasbrooke

graduation cap artwork

Transitioning out of school and into the "real world" means it's time to start building your financial future—and Mission Fed is here to help! The key to achieving financial success after school is threefold: Develop a workable budget, use financial products appropriately and have a plan to save for the future.

The earlier you start planning for financial success, the better. You don’t have to wait until after high school to educate yourself. By teaching yourself about personal finance, you set yourself up for success.

Here are some tips for achieving financial success depending on where you are in your education:

Financial Success after High School:

Congratulations, you’ve received your diploma and are on your way to becoming a responsible adult! Whether you’re going off to work or college or both, your income (money coming in) and expenses (money going out) are the basics of your finances.

Create a budget that takes into account your monthly income and expenses, including housing, food, transportation, clothing, entertainment and savings, among others. To have a workable budget, all of your expenses have to be equal to or less than the money that you bring in.

Many suggest that an ideal budget follows the 50-30-20 rule: use 50% of your income for needs like housing and food, 30% for wants like entertainment and save 20% for long-term goals or a rainy day. Whether or not you can meet these exact numbers, the concept is important: Keep your expenses as far below your income as you can, leave a little for yourself and make sure to save for the future.

With a budget in place, you’ll need the right financial tools to manage your finances. Start with a Checking Account that you can use to deposit your income and pay your bills. A Mission Fed Savings Account lets you earmark money for a rainy day or save for a major purchase. Once you have a good sense of your budget and how much you can save, automating transfers to your savings is a good way to keep you on track.

After you establish what your spending habits are and figure out how to manage your budget (we have more budgeting tips that will help you all year long), you may want to look into a credit card. This is definitely an area where you want to get all the information you can before you decide if a Credit Card is right for you, make sure that you have the self-discipline to use it wisely and set the goal of paying it off each month so you never carry a balance. Also, check into the benefits and any fees associated with the card. A Credit Card may provide a variety of benefits, be there in case of an emergency, and help with cash flow and building your credit score. It’s important to use your credit card to build credit, not to purchase things outside of your means. For example, you may opt to pay for your textbooks with your credit card, and then pay them off right away or as soon as your next paycheck comes in. To build credit, you should maintain a positive credit-to-debt ratio by only spending a small percentage of your allowable credit and paying it off every month.

Finally, once you have your basic financial management tools in place, it’s a good idea to start a Retirement Account at a young age. Putting money away for retirement right now may appear odd at first since retirement seems far away, but because of compounding interest, you can gain a great deal from starting now. For example, if you open a Roth IRA with $5,000 at an average 8% return, the Roth IRA would be worth $160,000 by the time you reach age 65. Waiting to make that move until you’re age 40 will be worth only $35,000 at age 65. You don’t have to invest $5,000 all at once—a little can go a long way when you start at an early age!

Financial Success after College:

The basic principles for financial success after high school (budget, the right financial products and investing) are the same now, with one added wrinkle: student loans.

It is important to plan ahead and make regular payments on your student loans and to work loan payments into your budget. If you happen to find yourself with some extra cash, you can prepay your loans early—most educational loans have penalty-free early repayment.

If you have multiple loans, it’s a good idea to prioritize them, paying down those with the highest interest rates first, provided you don’t miss payments on other loans and incur penalties. Another smart idea is to consolidate your loans. Find out if consolidation is an option so that you have one payment that can be distributed towards paying interest and principal.

Financial Success after Grad School:

Congratulations on reaching an education level that only 12% of the American population ever achieves!

In addition to the basics that we’ve covered already, perhaps you will look to make a significant financial move, such as buying a home, purchasing a car or starting a business. With your handy budget in place and Checking Account, Savings Account, Credit Cards and Retirement Accounts, you are already on the right track. Assuming that you have an established credit history, there are more financial products available to help you achieve your goals, such as a Mortgage LoanAuto Loan or business loan.

One thing to keep in mind is that many of these tips are flexible. Just like the 50/30/20 savings rule, you can adjust the numbers as you see fit. You may end up getting a credit card after college instead of during, or you may find yourself looking at an Auto Loan before you enter grad school. Make sure to monitor your budget to keep your spending in check and to reevaluate your finances every few months to every year after graduating high school and becoming a member of the “real world.” Follow these tips and keep educating yourself about money management to support your goal of financial success!

The content provided in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. Mission Federal Credit Union disclaims any liability for decisions you make based on the information provided.


Steve Hasbrooke

Steve Hasbrooke

Steve Hasbrooke is VP Controller at Mission Federal Credit Union. He has been with Mission Fed for over 12 years, and his primary responsibilities include regulatory reporting, annual financial reporting and accounting oversight.

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