COLLEGE AND BEYOND

ESTABLISHING SOUND MONEY HABITS AFTER HIGH SCHOOL GRADUATION

By Lucas Swatzell, Financial Professional, RJFS

University of Tennessee - Knoxville, Tennessee

A few short months ago, high school and college students all over the country walked across the stage to receive their diplomas in front of their friends, families, and loved ones. Congratulations Class of 2022! This moment of recognition represents the culmination of all the hard work and effort during four years of high school or college. Next comes the first taste of the real world as many graduates continue onto advanced education or enter the workforce.

The benefits of a college education are clear for many reasons including the ability to compete in today's job market, increased earning power, and expanded horizons. However, these advantages come at a price. Families may have had to finance a college education with help from student loans and other types of financial aid, such as grants and work-study, private loans, current income, gifts from grandparents, savings, and other creative cost-cutting methods.

You may be wondering how to help set your child up for financial independence. Here are some tips to help guide your recent graduate to achieve selfempowerment and a positive financial foundation for the future.

❱❱ Teach Them How to Budget

For the first time in their lives, many graduates have a steady flow of income. It may be their first time being completely on their own, and they will need to learn how to budget their money.

A common practice to help young adults budget is the 50/30/20 rule:

50% Essentials

These would consist of groceries, utilities, rent, and other everyday necessities.

30% Leisure

Things like going out to dinner, vacations, and shopping, fall under the “fun” category but are still important to many people’s daily life.

20% Savings:

Whether saving for the future or contributing to a general savings account, it is always a good idea to put some money away. If emphasized early enough, this could also help to build healthy financial habits that can last a lifetime.

A great way to ensure you are saving 20% is to “Pay Yourself First” by setting up your paycheck to automatically deposit 80% to your checking account and 20% to your savings account!

❱❱ Build a Credit Score

There are many positives to building credit in the early stages of adulthood. A job enables your children to begin to build a credit history, which can be important for the future, such as obtaining a mortgage when they want to buy their first house years down the road. Once they have a job, it may be a good time to apply for a credit card. Even if they start using it to only purchase gas, it will help in the long run. There are a variety of different credit cards, depending on their needs or preferences, such as those that provide airline or other rewards. Impress upon them the importance of paying off their full statement balance each period to avoid high-interest rates and maintain a good credit score.

❱❱ Schedule an Appointment with a Financial Advisor

It’s never too early to introduce your graduate to a financial advisor so they will have a resource they feel comfortable with for objective guidance and answers to financial questions they may have. When you are in the very beginning stages of adulthood, it can be intimidating to think about the future of your finances. Starting with the right financial plan and advice is often the key to helping to build a sustainable future — for the rest of their lives.

For additional tips on how to help your recent graduate become financially independent, reach out to an advisor at Southwestern Investment Group. We’re here to help answer your questions so that you and your loved ones can feel financially confident.

The Swatzell Wealth Team is dedicated to helping you and your family achieve your financial goals. They work to truly understand your specific financial needs and work together to implement a comprehensive financial plan tailored to you and your family helping you achieve your goals. For additional information call the Columbia office at (931) 505-8235 or the Cool Springs location at (615) 861-3518.

Investment advisory services offered through Southwestern Investment Advisory Services, Inc. an independent registered investment adviser. Southwestern Investment Group and Swatzell Wealth Team are not registered broker-dealers, and are independent of Raymond James Financial Services. Representatives may not be registered to offer securities and advisory services in all states. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Any opinions are those of Southwestern Investment Group and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss.