Education Center » Five tips for new grads

Five tips for new grads


Starting your first job after graduation is an exciting milestone, but it can also be overwhelming. In addition to meeting new people and putting your education to work, you may need to find a new place to live, establish an account for depositing your paychecks and paying your bills, and try to make sense of your employee benefits. And you may have some student loan debt to deal with, too.

Even with so much to think about, it’s a great time to build good habits that can last a lifetime. Consider these tips to help you begin your financial life on the right track.

#1: Set personal financial goals

It’s important to establish financial goals. A good short-term goal could be to establish an emergency fund so you’re prepared for the financial curveballs that may come your way, like if your “new to you” car suddenly needs new brakes. If you’re thinking about buying your own place, a medium-term goal could be saving for a down payment. And saving for your retirement may be a great long-term goal. Identifying your goals, whatever they may be, makes it easier to pursue them.

#2: Believe it or not, the time to start planning for retirement is now!

Think you don’t need to start saving for retirement because it’s so far away, or believe it can wait until you’re earning more money? Think again! Time is on your side — the earlier you start making contributions, the more time your assets have the potential to grow. If you were saving for a dream vacation with your friends, you’d probably start putting money aside as soon as possible so that you can afford the vacation and bring home a souvenir or two. Train yourself to think the same way about your future so that you're better prepared to pursue your retirement goals.

Think of your emergency fund and retirement plan contributions as fixed expenses to help you become more disciplined and more prepared for the unexpected.

#3: Create a budget and start saving

Once you’re clear about your financial goals, it’s much easier to establish spending priorities and stick with them. Since you only have a limited amount of money left over after you pay your fixed expenses (such as rent, car payment, phone bill), creating a budget or spending plan will make it easier for you to decide between picking up the tab at happy hour and setting aside money for an important purchase you’ve been considering. Think of your emergency fund and retirement plan contributions as fixed expenses to help you become more disciplined and more prepared for the unexpected. There are lots of online resources and apps available to help you establish and monitor your budget.

#4: Say “No!” to debt and excessive spending

It’s unlikely that you have to have a 60" TV or need a whole new wardrobe for vacation. Taking on additional debt before you have existing expenses under control — even when the offer terms seem too good to be true — is like stepping in quicksand. Because you’re working hard and earning a regular paycheck, you may feel like you deserve more “stuff,” but the truth is that it’s often harder to enjoy it when the bills start rolling in.

Bad credit can affect you in ways you might not expect. Prospective employers and landlords may look at your credit score to see if you’d be a responsible employee or tenant.

Before you use a credit card for a large purchase, challenge yourself to save up for it instead. Consider this a cooling off period to determine how much this item really means to you. If you still “have to have it” after you’ve saved enough to buy it, it might be worth owning. If you find that your priorities have changed, you’ve done yourself a favor by avoiding debt for something that you really didn’t need in the first place.

If you decide to use credit for purchases, get into the habit of avoiding interest payments by paying off your bill in full each month. Keep your credit score healthy by paying on time, and never exceed the account limit. Bad credit can affect you in ways you might not expect. Prospective employers and landlords may look at your credit score to see if you’d be a responsible employee or tenant. Some car insurance providers associate your rates with your credit score, and a lower score could result in you paying more for insurance.

#5: Take the time to learn about your benefits

If you’ve received what may seem like a mountain of brochures, paperwork and forms related to your benefits package, don’t rush through them or be tempted to ignore them altogether. It’s important that you understand and take advantage of what your employer has to offer — and to be aware of key dates and deadlines for enrolling.

  • You may be young and healthy now, but enrolling in a healthcare plan will ensure that you’re covered if you get sick or injured.
  • Participate in your company’s retirement plan as soon as you’re eligible, even though your retirement years may be a long way off. Consider contributing at least enough to receive the full company matching contribution (if your company offers one).
  • What about time off? Most full-time positions offer a certain number of paid vacation days per year, but make sure you understand your company’s policies. For example, vacation days may expire if you don’t use them all during the year, or you might be able to roll them over to next year.
  • Everyone likes a discount, right? It’s worth it to look into other company perks that may be available to you. From reduced gym memberships, to tuition reimbursement, to incentives for energy efficient cars, you never know what you may find.

Just like earning your degree, becoming financially responsible takes discipline and hard work, but it doesn’t have to be boring or difficult. Arm yourself with the right tools and information to get your adult life started on the right track.

Learn more and take action

Now is the best time to start planning for retirement.

  • Enroll in your company’s retirement plan as soon as you are eligible. If the plan is with Merrill Lynch, go to Benefits OnLine®.

Credit is a major part of your financial identity. Check out for videos and information on building credit, managing your credit report, keeping your credit healthy and more.


This material does not take into account your objectives, financial situation or needs and is not a recommendation of any particular strategy. You should carefully consider any strategy to determine whether it is appropriate for your situation and, if necessary, seek professional advice.

Investing through an employer-sponsored plan involves risk, including the possible loss of the principal value invested.


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