Financial Readiness for College Graduates
Have a new college graduate? Give your loved one the gift of financial readiness.
This is the time of year when college graduates prepare to make their career dreams and goals a reality. Despite their degrees, however, some are ill equipped to face financial challenges.
College graduates may not be as confident in their abilities to earn, save, and invest their money as parents had hoped. Here are 3 tips that can help prepare new college graduates:
Tip 1: Encourage your graduate to focus on college debt repayment.
College loans compel graduates to make repaying their debt a priority. Average per student college graduate debt is now over $40,000 and increasing every year.
Encouraging graduates to work with financial professionals in creating debt-management plans is one of the best approaches. Developing a financial plan early in life helps create disciplined habits of responsible money management that will last a lifetime.
Tip 2: Discuss the importance of starting to prepare for retirement.
It is projected that millennials will need to save nearly $1.2 million to sustain them over a 30-year retirement, which would generate an annual $40,000 income. However, when asked, only 25% say they believe they’ll need at least $1 million to retire comfortably.
While graduates have several decades of income earning potential, reinforcing the discipline of saving and investing for retirement will pay dividends in so many other areas of their life. By starting early in their careers, millennials will have more opportunities to build and meet their retirement goals.
Tip 3: Consider buying them term life insurance.
New graduates are typically excited about their independence and sense of accomplishment. You can help by buying term life insurance policies in their names. Buying term life insurance now also ensures you obtain the lowest, initial rates that stay the same for a set period of years.
College graduates are generally healthier now than they’ll be in 10 years. Policies increase in cost over time and provide added financial security later in life. Additionally, a spouse and children will be protected financially should something happen to your child before they have enough working years to save in an emergency fund.
All families, including college graduates, face financial challenges. If you would like us to share with a friend or family member on how to prepare financially for every stage in life, we’re happy to help.