What to Do With Your Money After College: A Simple Guide for First-Generation Graduates

When I graduated college, I felt lost about what to do with my first paychecks. As a first-generation graduate, I had to figure everything out on my own. Here’s what I learned about handling money after college. I knew I wanted to keep budgeting, but now I had to prioritize where my money was going to go from my first real job.

Understanding Where You're Starting

Like many first-generation graduates, I began my professional journey with different financial circumstances than my peers. I now had student loan debt and would not have much financial help from my family.

Priority 1: Building Your Emergency Fund

So, where did I start? I built an emergency fund first.

Most people live paycheck to paycheck, but that is risky. If your car breaks or you have an emergency expense, you may not have enough money to cover the unexpected cost. This is even more risky for those of us who may not have much financial help from our families.

Later in my career, I had a co-worker from a mining town. He told me how sometimes many of the families in the city would go months without work because the mining business slowed down. So, the people in the town learned to save a lot of extra money for a rainy day. That may be extreme, but it taught me that everyone needs to save for tough times.

How much should you save? Start here:

·      If you have a stable job (like government work): Save 3 months of expenses

·      If your job is less predictable (like sales): Try to save up to 6 months to a year's worth of expenses

I put this extra money in a regular or high yield savings account and made sure I did not spend it.

The emergency fund prepares you for significant expenses that could surprise you.

Priority 2: Get Free Money From Your Employer

Once I was ready for emergencies, I had to start thinking about the retirement benefits my employer provided. Growing up, we did not discuss 401(k)s or matches around the dinner table.

However, an employer match ended up being a major plus for me. My old job would match 6% of my salary if I put 9% into my retirement account. Think of it this way: for every $90 I saved, they gave me $60 extra just for saving for retirement. That’s free money you should be taking! When I took advantage of this perk, my savings skyrocketed over 4 to 5 years.

If you’re single or do not have a large family yet, try to get every penny of your company’s match.

Priority 3: Deal with Your Most Expensive Debt First

I was always afraid of credit card debt due to the horror stories my mother told me. So, I opted to pay for everything with cash long after I graduated. Growing up, we would occasionally need payday loans for emergencies. We would be in shock after seeing the actual cost of the loan. We generally want to avoid this type of loan if we can help it.

But if you have high cost debts like credit cards, you should pay that off first. Here are the types of debts you should pay off prioritize:

·      Credit card debt

·      Personal loans

·      Payday loans

·      Title loans

Having used credit cards later in life, I understand how high-interest debt can add up and become trouble for first-generation graduates. Through experience, I learned that credit card balances, personal loans, payday loans, and title loans typically carry interest rates exceeding 15% annually. Now that I am back in school myself, I make it my priority to tackle credit card debt before addressing lower-interest debt, such as my federal student loans.

Priority 4: Planning for Retirement Without a Family Blueprint

This one hits close to home for me. My uncle, now in his 60s, once told me he'd probably never be able to retire. Many people are not prepared to stop working if they want. That conversation scared me into starting my retirement savings early.

Here's what to do:

1. Put enough in your work 401(k) to get the full match

2. Try to save 15% of your pay for retirement

3. Look into opening a Roth IRA - it's an account that helps your money grow tax-free

Priority 5: Handle Other Debts

Now it's time to look at your other debts, like student loans. A friend who's good with money once told me something eye-opening: interest payments will be the biggest expense most of us have in our lives.

Think about that. If you can pay off your debts early, you'll save a ton of money on interest. Even paying a little extra each month helps a lot over time.

Why Following These Steps Works

I put these priorities in this order because:

1. Your emergency fund protects you from unexpected problems

2. Employer matching is free money you shouldn't pass up

3. Expensive debt hurts your finances the most

4. Starting retirement savings early gives your money more time to grow

5. Paying off other debts gives you more freedom with your money

A Special Note for First-Generation Graduates

If you're like me, you might be the first person in your family to deal with things like 401(k)s and investment accounts. That's okay! I felt overwhelmed at first, too.

[I've written this guide from my perspective as a first-generation graduate who has navigated the challenges of building financial stability without inherited financial knowledge.]