'No shame to living with your parents,' Graduates starting first jobs urged to set financial goals early

Graduates starting first jobs urged to set financial goals early

BOSTON - Graduation season is just about wrapped up and many new grads are starting their first jobs. For some, that means their first real paycheck and the need for some financial goals.

According to Ted Rossman of Bankrate, the first thing new grads should do is to build up an emergency fund.  Rossman admits the standard 3-to-6 months of living expenses is a lot to ask someone who is just starting out, but he recommends at least enough to cover the cost of replacing your phone. 

"If you don't have emergency savings, you're going to put it on a credit card and then that's super expensive. The average interest rate is a little over 20%," he said.

You do want to make sure you have a decent credit history.  So, if you don't have a credit card, apply for one.  But Rossman says it's best to pay the balance every month and stick to a simple card. 

"Don't get enamored with that 1%, or 2% or even 5% cash back or airline miles unless you are paying in full," he told WBZ-TV.

Housing will also have a huge impact on the finances of those who are just out of college. 

"There's no shame to living with your parents for a bit longer," Rossman said. "That could really beef up your savings fund for emergencies, for your first apartment, maybe even for buying a house down the line, maybe you could pay down a lot of student loan debt."

If you are going to rent an apartment, Rossman suggests considering renter's insurance. For about $20 a month, it can really save you if you have a burst water pipe or other unforeseen calamity.

Even if you are young and healthy, you need health insurance. 

"If you break your arm or something, or you need your appendix removed, this could be like tens of thousands of dollars," Rossman said. 

The cheapest option for most graduates is to stay on a parent's policy until age 26.  If that's not an option, opt for the employer's plan or a state-run plan though the MassHealth Connector.

Start saving for retirement. This one can be tough for the young folks who think retirement is a lifetime away.  But experts agree that time is on the side of young investors. 

"Every $1 you save when you're young could be worth, let's say, $20 by the time you retire," Rossman said. 

If your company offers a 401k plan, save at least enough to get the match if they have one.

And finally, be aware of lifestyle creep. This means increasing your spending every time you get a raise.  Instead, try to increase your savings when you get that bump in pay. 

The bottom line for new graduates, and really everyone, is to live on less than you earn. 

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