Two Cents: Bank of America Gives Grads Spending Tips

As a recent college graduate, you have probably put away the mortarboard, hung up your diploma and are starting to contemplate life after college. Then it hits you -- things can get very real, very fast when it comes to managing your money.

There is a lot to consider the first couple of months after college ends. However, if you can master a few initial ideas to managing your finances, like setting in motion a process for saving and taking advantage of the resources and benefits that will be at your disposal, you will be off to a great start.

Here are some ways you can start to develop good financial habits from Bank of America:

1. Saving vs. Paying debt

When you’re starting out on your own, one of your biggest financial challenges – especially if you took out loans to pay for college or used credit cards to buy books and supplies – is how to prioritize saving over paying down debt. While everyone’s situation is different, there are a few important things to look at.

• Do you have high-interest debt? If you have large sums on credit cards with double-digit rates, you may want to tackle that first, as this can be the fastest way to free up future cash for other priorities.
• Do you have an emergency fund? A car accident or a medical emergency, for example, can seriously derail your early career if you don’t have around three months’ worth of living expenses set aside.

After you have a handle on these top two priorities, you can move on to planning for retirement, or other long-term goals like saving for a home.

2. Making & sticking to a budget

Once you’ve tackled the big-picture priorities above, you can start to develop good savings habits by focusing on small-term goals. Whether it's something you need or something you want, creating a budget keeps these goals within site.

It can be daunting, but there are a few ways to make budgeting simple.

• Identify one thing to cut out – say a gym membership you don’t use or scaling back your Internet/cable bill – making this decision gives you a set figure you can put away per month.
• Set up an automatic transfer of a small amount, maybe just one percent of your monthly income, into a separate (but accessible) account like an interest-bearing money market account.

3. Employee benefits

You will also want to budget some time to think about long-term planning. The first step in this process could be taking advantage of all of your new-found employee benefits.

Some of the best of these benefits are pre-tax, like a flexible spending account for health care and especially a 401(k) retirement plan. If your company offers a 401(k) match – take it! You’re just leaving money on the table by not contributing – this should be a priority item for you.

Even smaller benefits, like health club memberships and transportation reimbursements, can add up. Consider all these factors when planning out your budget.

If you’re uncertain about your best course, ask questions! Get a mentor! Find someone to bounce ideas off. But most importantly – get started! The sooner you put in place your own culture of savings, the better your results will be.

All Twin Cities Bank of America locations have representatives onsite at their financial centers waiting to help! You can also visit their Better Money Habits website for helpful savings tips and tricks.