You just graduated from college – congratulations! Your whole life is ahead of you with amazing possibilities and abundant choices to make. Ready to dive in? Well, you do need to consider your student loans first. If you’re like the average college grad, you’ve got around $28,000 in student loans to pay off. For new doctors or lawyers who went to Ivy League schools, that might seem like a bargain.
While it might seem vital that you pay off that loan ASAP, that loan isn’t going anywhere. You’ll still need to make the minimum payments, but before you think about paying it all off at once, consider these other vital financial decisions.
Save For Retirement
Retirement? You’re only twentysomething! Why think of retirement now? Actually, this is the best time to start planning your retirement. The good news is that retirement is still 40 years away – at least. If you are able to start putting a little aside in an interest-generating account, then by the time you hit 65, you’ll be ready to have some great golden years.
Save For Your Kid’s College
You might not even be married, but if a family is part of your plans, then it doesn’t hurt to set up an education fund today. Again, it’s a little now that will build up into something big. Wouldn’t it be nice to send your children to college without a debt on their shoulders?
Buy Health Insurance
Welcome to the real world. Thanks to the Affordable Care Act, you can still be covered by your parents’ medical insurance until you turn 26. After that, you’re on your own. Since medical insurance is now required by law, you have to factor in those monthly payments to your budget.
Save For An Emergency Fund
We’re all told to save for a rainy day. Actually, you don’t need money for a rainy day. You do need it when you find yourself in between jobs or needing to make a big purchase like a car, home or major kitchen appliance. The goal is not to pile on more debt. That means paying with cash as often as you can. That emergency fund will come in handy in all kinds of weather.
Pay Off Bigger Debts
As crushing as the finance charges on your student loan might appear, it is probably lower than the rates you’re paying on most credit cards. If you’re carrying bigger debts, you’ll want to pay those off first. Money you have to pay in interest is money that’s not in your pocket.
Get A Decent Liability Insurance Policy
Insurance is one of those things that you’re better off having and not needing than needing and not having. You should be carrying liability as part of your auto insurance and homeowners/renters policy.
Get A Life Insurance Policy
This is really one of those considerations that apply to someone who is married and/or has children. You want to make sure you take care of those loved ones when you are no longer able to do that job. It’s all about peace of mind, but it’s also a major financial decision to factor into your budget planning.
Speaking of life insurance, you should also set up your will. This will establish who stands to benefit from your estate. It can also clearly set forth any end-of-life directives. Don’t leave something like that for your loved ones to decide.
Check Your Credit Report
One of the things that Congress got right was passing a law that allows everyone to check their credit reports for free at least once a year. This is a good habit to get into, especially with identity theft on the rise.
Set a Budget
Actually, setting a budget should be the No. 1 thing you do as you begin the next chapter in your life. Just because you have extra cash to throw at your student loan doesn’t automatically mean that is where it should go first. A budget will include all your living expenses and the priorities listed above. Once you have that set in stone, you’ll know what each month will look like in terms of money in and money out.
Engaging all of these decisions makes you proactive with your finances. That puts you in the best position to obtain all your goals.