Financial Tips for Recent College Graduates and Their Parents

What's Hot

2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

College seniors who graduate in December are halfway through their final semester. Are they ready for the Real World? Are their parents?

This post comes from partner site

If you’re saving for your child’s college education, you may need to save a little more for financial support after graduation.

According to a new study by American Express, 80 percent of graduates move in with their parents after graduation due to financial instability, and almost half of recent graduates are receiving financial assistance from their parents.

“The average student loan debt is $24,000,” says Bill Hardekopf, CEO of and author of The Credit Card Guidebook. “Graduates may also have another $3,000 in credit card debt. These young adults are financially stressed before they enter the workforce, and many have to turn to their parents for help. But these parents have just spent a lot of their money to pay for the college education and need to be saving for their own retirement. The parents may need their own financial help.”

Tips for recent graduates

1. Budget everything and put every dollar in place. Start with your net income – your income once taxes, healthcare, and retirement are taken out. Don’t underestimate expenses. Track your spending for a month to get an accurate understanding of how much your bills and expenses really are and where your money goes.

2. Start saving immediately from every paycheck, even if it’s a small amount. Open a retirement account at work or your own IRA. Time and compounding interest will help your small amount grow into significant savings by retirement.

3. Open a separate savings account to save for an emergency fund. The goal should be at least three months of income. If you lose your job or have sudden and unexpected expenses, your emergency fund – not your credit card – should be your safety net. Using loans to pay for an emergency simply adds to the cost of the emergency.

4. Pay off your credit card debt as soon as possible. If you’re carrying a balance on your card, don’t put any new purchases on your credit card. “If you can’t pay for it with cash, you can’t afford it, so don’t buy it,” Hardekopf says.

5. Set a payment schedule. If you aren’t trained in paying bills, it’s easy to misplace a bill or pay it late. This can be punished by late fees and lower credit scores. The easiest way for young people to pay bills is to do so online with scheduled reminders for payments.

6. Improve your credit score. It’s the number that lenders, employers, and even renters will use to judge you. A good score (a FICO of 720) will get you the lowest rates and save money on auto, credit card, and mortgage loans.

7. Monitor your credit history. It’s free through You can get a free credit report from each of the three credit agencies (Equifax, TransUnion, and Experian) every year.

Tips for parents

1. Prepare your student for financial independence. Put your college students on a budget. Give them a fixed amount of money every month that’s just enough to cover their expenses so they learn to control their spending – a skill they must have when they’re on their own. One day, they’ll have to survive in the world without the bank of unlimited funds from their parents.

2. Don’t sacrifice your retirement to pay for college. It may be tempting to tap your IRA for college, but there are costly consequences, and it can leave you short for your retirement. Once the money is spent, it’s difficult to rebuild a large balance. Early withdrawals from retirement accounts are expensive. You may have to pay income tax or a 10-percent early withdrawal penalty. Retirement account distributions also count as income.

3. Prepare a plan with your student to pay off college debt. Student loans may be necessary for many families to pay for college, but it is essential to have a plan to pay off this debt.

4. If your child must move home, establish rules. This should be a temporary move to help your child get financially established, not to avoid reality and responsibility. Charge a reasonable rent and an amount for utilities, groceries, etc.

5. Set deadlines and enforce them. Financial assistance is temporary help, not a trust fund.

6. Don’t help if you can’t afford it. If you’re struggling to make your own ends meet, you may not be able to afford to give much help to your child. Don’t go into debt or damage your own credit to give financial help.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Considering a Fixer-Upper? 15 Ways to Avoid a Money Pit

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,990 more deals!