Preparing for a financial life after graduation

If you're going to graduate from college in the next few years I've got great advice for you and it's pretty simple. Listen to the 'How Not to Move Back in With Your Parents' podcast below courtesy of IU Money Smarts for my thoughts on starting a great financial life after graduate.

After living off of student loans and a small income from a part-time job for four years, it can be tempting to view your income from a full-time job as play money. You want to rent that amazing loft and to buy a new car because you can now afford the monthly payments with your income. But don't be too hasty. Graduating from college can be a sort of fresh start (minus student loans) so here are my tips for getting and staying on the path to financial wellness:

1) If you have student loans accept them and make a plan. Don't get complacent. Most student loan payments don't hit for a few months after graduation but be proactive and find out what your payment will be. Then take that amount off of your take home pay amount. You should budget from that amount (take home pay - student loan payment = actual take home pay).

2) Don't buy a new car. It can be so tempting to go out a get a new car now that you'll have a steady income to pay for a car loan. But don't do it. Your transportation costs need to stay within 15% of your post-student-loan-take-home pay. That also includes insurance and fuel. If you live in a larger city, public transportation is a great option for keeping transportation costs low. If not, living closer to work will help you save on fuel.

3) Wait to rent a place until you get a job. Once you have a job you will not only have a better idea of your income, but you can also select an apartment near your job. This can help save on transportation costs. As far as rent goes, I do not believe that renting is 'throwing away your money' like it's commonly believed. Just keep your rent costs within 25% of your budget and you'll be fine.

Bonus question from Alex: How much should college graduation aim to have saved up when they graduate? I love this question, because Alex is a smart guy, but honestly I would happy if you came out of college with as little debt as possible and no savings. And even though this series is titled, 'How Not to Move Back in With Your Parents' it wouldn't be the worst thing to move back in with your parents for a month or two after college while you job search. Just set a deadline for yourself and get out as soon as you can. It isn't good for you or your parents for you to be living off of them.

What you do within even the first six months after graduation can set the tone for your whole financial life. Don't set yourself up for financial stress buy spending beyond your income. Stick to my ideal budget and you will be set.