Best Credit Card and Money Advice for College Grads

Here is my top 10 advice for new college graduates with regards to credit cards, money, finance and career choice. If I could turn back the clock, this is what I would have done better.

1. Pay Your Credit Card Bills Fully and Your Other Bills On Time

Yeah, sounds pretty simple. But in truth, many people do not have the habit of paying bills on time because they are disorganized. Find a way to be organized because regular late payments hurt your credit score.

Paying your bills fully (especially credit card bills) is one of the most important habits you can prick up. People who do not get into this habit simply lack budgeting and financial acumen. This lack of discipline manifests itself in not watching what you spend, pampering yourself with little things like drink with friends (which add up), Venti Starbucks. Think about it, the typical interest on credit cards is about 18%. Most of us have a hard time picking stocks whose growth will exceed 12%. Can you imagine borrowing at 18%?

2. Run Your Finances Like a Business

Yep. That means having a budget (and sticking to it), watching every penny. It also means categorizing your bills from the most important to the least important. Your rent, insurance payments, utility bills are the most important. As with any business, there is always an …..

3. Emergency Fund – start establishing one right away

Yes, your first priority is to establish an emergency fund for about six months. Every business always has an ‘cash on hand’ or ‘lines of credit’. And should you as an individual. Start saving for this fund right away before you think about investing.

4. Have a plan to pay off Your Student Loans

If you have student loans, you should devise a systematic plan to pay off the loan as soon as possible. You want to get rid of this burden as soon as possible.

5. Set up automatic enrollment for bills with your credit card

Put your bills on automatic payment to ensure you do not miss paying your bills. You can either choose to have your bank automatically pay the bills or better still, charge the bills to your credit cards. That way, if there is any dispute, bills on your credit card are easier to handle. You can also earn reward points or cash rebates with a cash back credit cards.

6. Talk to your partner about money and finances if you are living together

For all the love that you feel for each other, money is one of the major causes of breakups, divorces and many unpleasant things. Talk to your partner about money matters early in your relationship. It is tough enough, budgeting, sticking to a budget, thinking about your career and all that stuff. It is even tougher for two to agree on this matter. But you must talk about it.

7. Get a Cash Rebate Credit Card

If you have managed to build a decent credit history upon graduation, then you should consider getting a cash back credit cards, which pays you a certain percentage that you spend on the card back in the form of cash rebates. Don’t use that as an excuse to overspend, but careful use of such cards can earn you some nice change at the end of the year.

8. Build Your Credit History if you have not

While critics have always claimed that credit card companies lure students with credit cards and easy credit, the truth is that there is never a better time to get a credit card than when you are a student. Firstly, most (if not all) student credit cards have no annual fee. Try getting a credit card after you graduate if you have no credit history. You will most likely have to apply for a secured credit card (which comes with an annual fee). If you are reading this and are still in college, it is best you get a college student credit card to build your credit history.

9. Monitor Your Credit Reports and Scores

Develop the habit of monitoring your credit report regularly. Understand what goes into your fico score. You can get a free copy of your credit report from each of the credit bureaus every year. If you are planning on taking a loan (auto, mortgage etc), it is best that you monitor your credit score six months before and take steps to improve your credit. There are lots of services (which charge a monthly fee) that lets you get your credit score from the three bureaus. For example, Equifax Credit Watch™ Gold with 3-in-1 Monitoring alerts to changes in your reports and also provides some insurance against identity theft.

10. Invest in Yourself and Your Career

The biggest factor in how financially successful you will be is not how good your portfolio returns are. The biggest factor is your career and how much you make (assuming you save and invest as well). In fact, if you are spending too much time reading about ‘investments, debating over actively managed versus index funds and these stuff”, then you are probably not spending enough time on yourself. By that I mean investing in self improvement, investing time in networking with industry peers etc – things that will help you move up the ladder and make more money!.

OK – that’s my advice for now. And this is what I would have done if I could just turn back the clock.