Buffalo, N.Y. (WBEN) - College graduation season is upon us, as many local college students will be walking across stage this weekend to receive their degrees at colleges across Western New York.
While earning a degree is a rewarding experience for many students, what financial advice should graduates be aware of once their work in the classroom is completed?
Jeff Boron from SendYourKidsToCollege.org says one of the first tasks graduates should tackle is looking at a budget to manage finances.
"Putting together, 'Here's where my income is coming from, here's what I will pay in taxes, here's what I will take home.' And from there, 'Here are the things I must have,' and then create a winning budget where you're actually saving a little bit of money, as well as probably paying down some student loan debt," said Boron in an interview with WBEN. "Monitor your expenses, keeping expenses under control, and starting to change a pattern where you're going to start saving a little bit of money for the future."
For those students who may have to manage student loans after graduation, Boron says one of the first things one may want to do is get more guidance and assistance through StudentAid.gov.
"You want to look at if there's any programs which will benefit you under this age program. For instance, Income Based Repayment, or maybe you're starting to initiate, you got a job in the public sector, and in the future you're going to go for public loan forgiveness for working in the public sector in certain communities. You want to start to examine that."
Ignoring student loan debt is something Boron advises to stray away from.
"Let's say you haven't found a job yet, you're not going to have an income and your student loans will be coming due soon, you don't want to ignore it. You don't want to just not pay them and hopefully sit there and think that they're not going to come after you. You want to get ahead of this. You want to talk to them, and you want to lay out a plan for them, whether it'd be the Income Based Repayments or any other program," Boron explained. "You just do not want to ignore student loans, because they will not go away, and it will put you in a much worse position by ignoring them than addressing them right off the top.
"The big thing is get on top of your student loans. There are various programs out there which can help your situation get better, whether it'd be consolidation, student loan forgiveness or deferring them or basing them on your income. But just put together a financial plan for yourself at this age, and someday you'll thank me for that."
Mike Lomas from The Financial Guys says one key for college graduates right out of school is save as much as you possibly can.
"I would think most, if not all of them, are in a very low tax bracket, almost zero. If you can start putting money away into a Roth IRA, they've got the power of time," Lomas said with WBEN. "That's something that none of us can recreate. We can recreate our work ethic, we can recreate business models, but we can't recreate time. And time is the biggest thing."
Lomas advises if you start saving right out of college and put money away, you can work to double your savings down the line.
"We always say 'that one extra double.' Your money doubles if you divide the interest rate you're earning into 72, it'll tell you how many years it's going to take to double your money," Lomas explained. "If I'm earning 7.2%, it's going to take me 10 years to double my money. If you get that one extra double in the future, you start at 20 instead of 30 or you start at 19 instead of 29, it could be the difference between having $1 million and $2 million, or $2 million and $4 million in your retirement."
But Lomas recommends for families not to wait until their student is just graduating college to save.
"We've got to get kids saving earlier," he said. "I have a daughter who's graduating from Nardin, and she's working part time, and we started an IRA. And I say every time she's earning some money, I want her to put a little bit in an IRA account away for her future. My hope is that I can get her as a saver early, so as she makes her way through college and hopefully gets her degree and a good-paying job or a position, or starts to build out her own company or whatever, she gets in that momentum of putting away a little bit of her money every month."
Another suggestion Lomas has for students early on is go to college or a trade school and enroll in a program or major that you think is going to pay the money.
"You hear the story of, 'Yes, you've got to be happy,' and I want 100% agree with that. If you're happy in life and you're doing something you love, it's not a job, that's all well and good. But if you're going to take out massive amounts of debt with a career or on the path of a career that might only pay you $20,000 or $30,000, you could get yourself in financial trouble," Lomas said.
What are financial advisors recommending students should not do after graduating college? Boron advises to not go on any sort of unnecessary spending spree.
"Avoid running out and buying the expensive luxury vehicle or something that's not in your budget," he said. "If it's in your budget and you've sat down, you've carefully prepared a budget, that's OK. But don't get behind the 8-ball because you're making some purchases that you probably shouldn't make at this point in your life."
Meanwhile, Lomas says don't waste any time trying to find work, even if it's something on the side to help pay off any kind of student loans.
"If you're going to take out loans, maybe you offset that with working at a pizzeria or something part-time and paying a little bit of that tuition down. You don't need to borrow 100% of it, maybe you borrow a portion of it, and then you make sure you're not wasting your time," Lomas said. "Go in, try to focus as best you can, try to crank it out in four years so you're not paying for five. Try to focus on the classes that are going to matter, and make sure you're not walking out with massive amounts of debt that you're not going to be able to repay."