One of the hardest parts of adjusting to life after college is realizing you're now a "real adult" – and, what's more, that you need a real adult bank account and a solid financial plan for your future.
As part of National Financial Literacy Month, GEICO released a few financial tips to help recent graduates adjust to life after college.
"It's important for the younger generation to establish and maintain good financial habits after graduation and beyond," said GEICO CFO Mike Campbell in a statement. "This would not only help them save money, but it will also help them prepare for a solid financial future. These are also good reminders for everyone."
Taking the first step
The first step, GEICO advises, is to develop a budget. Specifically, identify your financial goals, set a timeline for when you want to reach them and save accordingly. Chances are, if you use your degree to get a good job, you won't be living paycheck to paycheck anymore. Good news, right? This situation actually brings its own pitfalls – namely, the temptation to blow all the money in your bank account.
One way to mitigate this temptation is to open an account that's exclusively for your savings and shouldn't be touched, except in an emergency. Set up a savings plan with your community bank and divert what you need for regular living expenses to your checking account.
What's your score?
Your credit score, along with your Social Security number, is an important digit that will follow you throughout your life. The higher your score, the better. Factors that will lower it include missing credit card payments and defaulting on loans. Not only is paying bills on time noted by lending institutions, but it also allows you to sidestep late fees, high interest payments and other avoidable charges.
People who don't stay on top of their credit scores may be in for a nasty shock when they apply for a job, insurance policy, car loan or apartment. In some cases, lower-than-expected credit scores are due to mismanagement of personal finances. In others, however, they could be indicators of something more sinister – identity theft. According to Javelin Strategy & Research, 11.6 million U.S. adults fell victim to identity theft in 2011, a year-over-year rise of approximately 13 percent. Monitoring your credit report frequently is a good idea, not only to keep informed about your credit score but also to head identity theft off at the pass.