Senior year! It’s what you’ve been working towards since that first day of kindergarten – or at least what your parents have been thinking about.
Senior year of undergrad is also the last time you really get to delay maturity and live in the protective bubble of college (grad school just isn’t the same). Even though it would be nice to spend the whole year soaking up the memories and hitting all your favorite spots – it’s also the time to start getting your financial house in order.
You can minimize your stress after graduation by taking the four steps below.
Get a credit card – and use it wisely
Contrary to popular belief, credit cards are not the root of all debt and evil. Rather, credit cards can be a vital tool to build a healthy financial life. If you use them right.
Due to the CARD Act, it’s much more difficult for college students to get their hands on a credit card – probably a good thing. However, college seniors who are 21 or older with proof of income are typically eligible to get a card without a co-signer.
There are plenty of college-targeted credit cards, but the key is to find one with no annual fee. At this stage in the game, you shouldn’t be worried about rewards or bonuses. You just need to use a credit card to help build a strong credit score.
The strategy is simple.
Step 1: Get a credit card.
Step 2: Attempt to make one or two small purchases a month – these purchases should be less than 20 percent of your available credit limit. If your credit limit is $500, then you shouldn’t spend more than $100 in a billing cycle.
Step 3: When your billing statement comes in, pay the balance on time and in full. Avoid just paying the minimum.
Taking these simple steps in college can help build the foundation for a healthy, 700+ credit score.
Check your credit score regularly
It’s important to check your credit score as you begin to build your history. There are plenty of free ways to check your score, so there is no need to spend your money buying access.
There are also credit cards that offer access to scores including the Discover it® chrome student credit card or the Capital One Journey® Student Rewards card.
The ultimate goal is to build up to a score of 700 or higher.
A high credit score can help you get access to the best products on the market. There are also some jobs that will run a credit check on you during the hiring process and if you want to rent an apartment – a landlord will most likely pull your credit report.
If you’ve already dug yourself into credit card debt, then senior year is the time to start seriously working to pay it off.
Assess your student loan situation
No one really wants to think about debt in college. It’s senior year, time to live it up and not worry about what’s waiting out post-graduation. While it would be incredibly easy to tuck yourself away in a protective college cocoon, you need to get your financial house in order before graduation.
Take the time to sit down and organize all your student loans. Learn which are federal and which are private. Make a list of who owns them and when you’ll be expected to start making payments. Federal loans typically give you a six-month grace period, while private loans could kick-in a month after graduation.
Don’t hesitate to start making some payments, especially if your interest is subsidized and anything you pay goes toward chipping away at the principal balance on your loan.
Do yourself a favor and save some of your post-graduation stress by figuring out your student loans early.
Begin building an emergency fund
Building an emergency fund and getting a job go hand-in-hand. When you start making money or if you already earn a paycheck, set a goal to save at least $1,000..
The typical personal finance advice is to have an emergency fund of three to six month’s salary. It’s OK if you build up to that amount after you graduate. For now, focus on having at least $1,000 set aside and don’t touch it unless an actual emergency pops up.
Building up a financial buffer can help prevent falling into debt if a doctor bill pops up or your car stops working. Developing the habit to save $1,000 while you’re still in college or shortly after graduation also sets you up for saving success in the future.
Don’t forget to have fun
Think of this list as a guide to help you through the last two semesters of college and prepare you for life after graduation. But don’t get so focused on trying to figure out the future that you forget to have fun. Enjoy your senior year.