Graduating? Here’s How To Become Financially Independent.

Here’s what to do after your diploma is handed to you

If you’re embarking on that walk across the graduation stage to get your degree — congratulations! Whether you’re headed toward the job market, more training or some other avenue, financial independence is closer than it was before. Not all college grads achieve it right away — Zillow reports an “explosion” in the number living with parents — but it’s something to aim for. Here’s how to get there.

Make that money

Before you throw out some statistic about how hard it is for college grads to get a job in their field of study, remember that there are other jobs out there. “The number one thing to do when you graduate is to develop some stream of income,” says Stefanie O’Connell, author of The Broke And Beautiful Life. She regrets that most grads think they need to have a career-oriented position as their first job. Pick up a side hustle or a shift at your favorite restaurant. It can be anything — if you want to be financially independent, you need your own money. Period.

Keep on living the college life

No, I’m not talking about a diet of ramen and a day that ends at 4 a.m. — I’m saying don’t rush to get land your own digs. The average rent on a one bedroom apartment in a city is $1,199.16 per month and $948.05 per month outside of a city. Living with a roommate can lessen the burden on your wallet and help free up cash to put towards your student loans or an emergency fund.

Sophia Bera, CFP and founder of Gen Y Planning, says getting financial independence also doesn’t mean rushing out and buying a brand new car with your first paycheck. Used is fine. Public transportation, if available, may be even better. “Your two big costs will be housing and transportation, so do your best to try and keep those two expenses low.”

Create your credit

The best time to start building your credit is right after you graduate, says O’Connell. “Companies view new graduates as credit worthy.” The most efficient way to build credit quickly is to open a credit card and pay it off on time and in full each month. If you find you can’t get a card on your own, consider a secured card (which requires you to make a deposit with the issuing bank). If a parent is willing to add you to their card as an authorized user that can help build credit as well. Work out an agreement to pay for your shares of the bills in full and on time. Having good credit is essential to becoming independent says O’Connell. “If you want to rent your own place, you are going to need some credit to qualify, and [although this may be unavoidable in the short term] if you want to be financially independent you don’t want your parents co-signing your lease.”

You’re never too young to start

Saving, that is. Once you’ve established an income, start building a savings buffer in a liquid savings account. Automatically transfer a small sum from checking to savings every time you get paid or ask your employer if that’s something that can be done for you (a solution known as “paycheck splitting”). An alternative: Sign up for an app like Digit that will save for you. It’s free for a short trial period then $2.99 a month. Once you land your first job, familiarize yourself with your company benefits. Does your company offer a match on your 401(k) or something similar? If so, Bera says to try to take full advantage of it because the match is essentially free money. Your aim is to put 15 percent of your income (including matching dollars) away for retirement. If student debt is standing in your way, look at income-based repayment solutions that can ease the burden.

With Hattie Burgher

Jean Chatzky

Jean Chatzky

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