by Melissa Brock | Jul 26, 2024 | College Money Tips |
Families often find the costs of college a burden difficult to handle. However, what if there was an opportunity to smooth this task to some extent with the help of available digital resources?
Search engine optimization (SEO) tools might be one way to raise money. Through SEO tools, a lot of money that one would want to spend in college can be saved. To help parents and students achieve the goal of making college affordable, this blog post will explain the use of tools related to SEO. Keep reading to learn more about SEO for college savings.
Understanding SEO for Financial Gains
SEO is a technical marketing solution that improves website position in search engine lists to provide the maximum exposure to people. SEO attempts to enhance a site’s relevance and prominence to specific search terms in the context of sponsored and paid results through keywords, meta descriptions and backlinks, among others.
The traffic generated is organic, meaning you can rely on traffic for monetary value through advertising, affiliation or selling. If properly applied, SEO has been proven to be an effective technique for planning and financing college, since it helps a person make money continuously. SEO is beneficial on multiple levels and provides a great return on investment for your educational and financial objectives.
Practical SEO Tools for Parents and Students
Let’s take a look at some practical SEO tools you can use.
Free SEO Tools
Several free SEO tools can be a good starting point for parents and students. Google Analytics, for example, provides insights into website traffic, user behavior and the effectiveness of marketing campaigns.
Another great tool is Google Search Console, which helps you understand how Google views your site, alerts you to issues, and offers data on search performance. These tools can offer valuable data for free and are ideal for those just starting out in SEO or looking to improve their digital presence. Additionally, tools like Ubersuggest and MozBar can provide keyword suggestions and on-page SEO analysis, further helping you craft a strong SEO strategy.
Paid SEO Tools
While free tools are helpful, paid SEO tools offer more advanced features and more comprehensive data. Ahrefs and SEMrush provide not only keyword research but also in-depth backlink analysis, site audits and competitive analysis. Investing in these tools can significantly boost your SEO efforts by uncovering hidden opportunities and streamlining the optimization process. This, in turn, can enhance your website’s visibility, drive more organic traffic, and ultimately help you increase revenue streams that could contribute to college savings. Other notable paid tools include Moz Pro and Majestic, each offering unique features that can further refine your SEO strategy.
Step-by-Step Guide to Using SEO for College Savings
Check out a few tips to use SEO for college savings.
Keyword Research for Education Savings
Keyword research is the first step in any SEO strategy. Use tools like Google Keyword Planner, SEMrush, or Ahrefs to find high-traffic, low-competition keywords related to education and savings. Sometimes, resources like that, or even Netflix plan settings can be blocked by geo-restrictions, which is where virtual private networks (VPNs) work to your advantage.
VPNs allow you to change your IP address and access content that may not be available in your current location, giving you more options for keyword research. VeePN is an excellent VPN provider that offers multiple server locations and unlimited bandwidth for a budget-friendly price. By using a VPN for Chrome, you can uncover valuable keywords to target in your content and increase the chances of ranking high in search results. This will help you create content that attracts visitors who are specifically interested in these topics. Look for long-tail keywords that your target audience might be searching for, as these can often present less competition and more targeted traffic.
Implementing SEO Strategies
Now that you know your keywords, you need to optimize your website by applying these keywords. To begin with, go through all of the website’s on-page factors, from the title tags, meta descriptions and header tags, to optimize them. It’s also important that you use your chosen keywords progressively into your content, so your written work is easy to read and interesting. Ensure that your website is optimized for mobile gadgets and loads very fast in order to provide a good experience for users. Moreover, concentration should be on internal linking which acts as a guide to visitors and boosts the site’s ranking and relevance.
Creating Shareable Content
In SEO, content is king, so it’s all about creating good content that will be helpful and shared among users. Create a set of materials in the form of blogs, videos and infographics and e-books with useful information on how to save for college. Get visitors to your site and post your articles on social networks such as Facebook and LinkedIn.
Engage readers by using proper headlines and good graphics that will draw their attention. The greater the likelihood of a piece of content being shared, then there is a likelihood that it will be passed around, increasing viewership and possibilities of saving money. Even after sharing with your readers, you can call on them to share the content you have provided in different networks.
Beyond the Basics: Advanced SEO for Maximized Savings
When you’ve mastered the basics, feel free to go on to more advanced strategies.
Advanced SEO Strategies
For those who want to go beyond basic SEO, advanced strategies can offer even more benefits. For example, you can use schema markup to enhance your search engine listings, making them more attractive to users. Additionally, implementing structured data can help search engines better understand your content, potentially leading to rich snippets that make your listings stand out even more. Online calculators and other interactive tools can also draw more traffic to your site while providing valuable resources for your audience. These advanced strategies require more technical knowledge but can offer significant advantages in driving traffic and savings.
Leveraging Longtail Keywords
Longtail keywords are longer and more specific keyword phrases. They may have lower search volume, but they often have higher conversion rates. Using longtail keywords can help you tap into niche markets, maximizing your financial gains. Moreover, these keywords often face less competition, allowing your content to rank higher in search results and attract a more targeted audience.
The Role of Social Media and SEO
Social media can significantly amplify your SEO efforts. Platforms like Facebook and Instagram can drive a massive amount of traffic to your site. Optimize your social media profiles and share your content regularly to increase your visibility. Furthermore, engaging with your audience on social media can lead to more shares and backlinks, which are valuable for improving your search engine rankings. Social signals also contribute to building your brand’s authority and trustworthiness online.
SEO: One Way to Pay for College
It’s crucial to understand that the right approaches to SEO implementation can be instrumental in attaining the desired results to enhance college savings. By performing extensive keyword search, employing on-page optimization and other more technical SEO procedures and using the influence of social media, you can find effective ways of improving your Internet presence. Quality and relevant content will attract visitors, increasing traffic.
By constantly updating the work approach and studying the tendencies in SEO, you can develop a bulletproof strategy that can provide maximum visibility and, at the same time, help you save for your child’s educational dreams. Accept the current state of SEO and let it help you adapt to the changes so as to achieve your intended college savings goals.
by Melissa Brock | Jul 19, 2024 | College Money Tips |
As parents of high school children, financial freedom becomes even more vital.
It’s a time when expenses increase, college looms on the horizon, and the need for a secure financial future for the family becomes paramount.
Smart investment strategies can provide the means to ensure stability and growth, offering peace of mind and the ability to support your children’s dreams and aspirations.
By carefully selecting and managing investments, parents can create a solid financial foundation that supports both current needs and future goals.
Investing in Real Estate
Investing in real estate is a tried-and-true method for building wealth and achieving financial security. It provides numerous benefits such as passive income, potential property appreciation, and tax advantages.
For parents of high school children, real estate investments can be a powerful tool to bolster their financial portfolio and prepare for upcoming expenses like college tuition.
Buy-and-Hold Strategy
The buy and hold strategy involves purchasing properties and holding them for an extended period, allowing for steady rental income and appreciation in value.
Here’s how this strategy can benefit parents:
- Generating passive income: Rental income can provide a consistent cash flow, helping to cover educational expenses and other family needs. For example, purchasing a duplex and renting out one side while living in the other can offset mortgage costs, freeing up money for college savings.
- Appreciation: Over time, properties generally increase in value, offering a significant return on investment that can support long-term goals. A property bought in a growing neighborhood could significantly appreciate, providing capital that can be used for college tuition or other major expenses.
- Tax benefits: Real estate investments come with various tax advantages, such as deductions on mortgage interest, property taxes, and depreciation, which can help in managing overall financial health. Using a tax advisor to navigate these deductions can optimize your tax returns, maximizing your investment benefits.
Real Estate Investment Trusts (REITs)
For parents looking to invest in real estate without the demands of property management, Real Estate Investment Trusts (REITs) offer a practical alternative.
REITs are companies that own, operate, or finance income-producing real estate. Investing in REITs allows parents to:
- Diversify portfolio: REITs provide access to a diversified portfolio of real estate assets, reducing investment risk. For example, REITs like Vanguard Real Estate ETF offer exposure to various property types, from residential to commercial.
- Liquidity: Unlike direct property investments, REITs are traded on major stock exchanges, offering greater liquidity. This means you can easily buy and sell REIT shares as needed, which is beneficial when planning for near-term expenses like college fees.
- Dividend income: REITs are required to distribute at least 90% of their taxable income to shareholders, providing a reliable source of passive income that can aid in funding education or other significant expenses. An example is Realty Income Corporation, known for its consistent monthly dividend payouts.
Fix-and-Flip Strategy
The fix-and-flip strategy involves purchasing properties, renovating them, and selling them for a profit.
While this approach can be lucrative, it requires careful planning and execution. For parents considering this strategy:
- Conduct thorough research: Identify properties with potential for improvement in neighborhoods with strong resale value. For instance, using tools like Zillow or Redfin to find undervalued homes in up-and-coming areas can help identify good investment opportunities.
- Budget wisely: Ensure renovation costs and timeframes are realistic to avoid financial strain. Accurate budgeting is paramount for maintaining financial stability while undertaking such projects. Using renovation budgeting software like Homezada can help manage costs effectively.
- Leverage expertise: Working with experienced contractors and real estate agents can enhance the success of fix and flip projects, reducing the risk and increasing profitability. Hiring a reliable contractor with a proven track record ensures quality work and adherence to budgets and timelines.
529 College Savings Plans
A 529 College Savings Plan is a powerful tool for parents looking to save for their children’s higher education costs.
These plans offer significant tax advantages and flexible investment options, making them an ideal choice for building a college fund.
Understanding the various strategies and benefits associated with 529 plans can help parents maximize their savings and ensure they are well-prepared for future educational expenses.
Age-Based Investment Strategies
529 plans often offer age-based investment options, which automatically adjust the asset allocation as your child approaches college age.
This strategy is designed to maximize growth potential during the early years and reduce risk as the time to college draws nearer.
- Early years (newborn to elementary school): During the early years, it is beneficial to have a higher allocation in stocks (about 80% to 100%) to take advantage of growth opportunities. As your child is still many years away from college, this aggressive approach can yield higher returns despite the higher risk associated with stocks.
- Middle school years: As your child enters middle school, the investment strategy should start shifting towards more conservative assets. A balanced approach, such as 60% bonds and 40% stocks, helps in securing the gains made during the earlier years while still allowing for some growth.
- High school years: In high school, which is of special interest to us, it’s very important to minimize risk. A conservative mix of 70% to 80% in bonds and 20% to 30% in stocks is recommended. This helps protect your investment from market volatility as you near the time when you will need to use these funds for college expenses.
Tax Benefits and Rollover Options
One of the primary advantages of 529 plans is the tax-free growth and tax-free withdrawals for qualified education expenses. Starting in 2024, unused 529 funds can be rolled over into a Roth IRA for the beneficiary, providing more flexibility if the funds are not needed for education.
This rollover option allows up to $35,000 to be moved into a Roth IRA without penalties, provided the 529 account has been open for at least 15 years.
Impact on Financial Aid
While 529 plans are considered in financial aid calculations, they generally have a minimal impact when owned by the parents.
Only up to 5.64% of the account’s value is considered in the Expected Family Contribution (EFC) for financial aid purposes. In contrast, if the student owns the account, 20% of its value can be counted.
It’s usually more advantageous for the parent to own the 529 account to maximize financial aid eligibility.
Selecting the Right 529 Plan
Choosing the right 529 plan involves considering various factors, such as state tax benefits, fees, and investment options.
Many states offer tax deductions or credits for contributions to their 529 plans, making it beneficial to invest in your home state’s plan if these benefits are available.
Some plans have lower fees, which can significantly impact the growth of your savings over time .
When selecting a plan, it’s also important to look at the investment options and whether they align with your risk tolerance and financial goals.
Age-based portfolios are ideal for those who prefer a “set it and forget it” approach, while static portfolios may appeal to more hands-on investors.
Key Takeaway
By integrating a 529 College Savings Plan with strategic real estate investments, parents can create a robust financial plan that addresses both immediate and future educational needs for their children.
Seeking professional financial advice and regularly reviewing investment portfolios ensures optimal growth and adaptability to changing financial landscapes.
by Melissa Brock | Jul 18, 2024 | College Money Tips |
Achieving financial independence is a goal many aspire to, yet few fully understand its profound impact on life quality and future security. Financial independence means having sufficient income to cover living expenses without needing to work actively.
For parents, particularly those with high school students, starting to invest early can be a game-changer.
Early investments not only pave the way for a secure financial future but also set a strong example for children, teaching them the importance of financial planning and responsibility.
With the rising costs of higher education and living expenses, parents who invest early can ensure they are better prepared to support their children’s aspirations and needs. Learn the best way to save money for college below — make that multiple ways!
Going for Financial Independence
Financial independence refers to the state where an individual or family has enough wealth to live on without having to work indefinitely. This wealth typically comes from savings, investments, and passive income sources that generate consistent revenue.
The significance of financial independence lies in the freedom it offers — the ability to make life choices without being constrained by financial limitations. This can mean retiring early, pursuing personal passions, or simply enjoying peace of mind knowing that future needs are covered.
The long-term benefits of achieving financial independence are substantial. It provides a safety net in times of economic uncertainty, reduces stress related to financial instability, and allows for better planning of life events, such as children’s education and family emergencies.
For parents, achieving financial independence is particularly crucial as it enables them to support their children through critical phases of their lives, including college and early adulthood.
Why Start Investing Early?
Starting to invest early has numerous advantages, the most significant of which is the power of compound interest. Compound interest means earning interest on both the initial principal and the accumulated interest from previous periods.
Over time, this leads to exponential growth of investments. For example, a small investment made when your children are young can grow significantly by the time they reach college age, thanks to the compounding effect.
Early investments also contribute to financial stability for the family. They create a financial cushion that can be used for various purposes, such as covering unexpected expenses, funding higher education, or even supporting a comfortable retirement.
By investing early, parents can mitigate the impact of inflation and ensure that their savings grow in real terms, maintaining their purchasing power over time.
Early investments help in securing the future education costs of high school students. With college tuition fees increasing steadily, having a robust investment plan can make a substantial difference.
Parents who start investing early can accumulate enough funds to support their children’s educational goals without resorting to loans or compromising their financial stability.
Setting Investment Goals
Setting clear, achievable investment goals is a fundamental step in building a successful investment strategy. Begin by identifying your financial objectives and determining the timeframe for each goal.
You might aim to save for your child’s college education in ten years, or you might want to build a retirement fund over the next 20 years. Specificity is key – instead of setting a vague goal like “save for college,” determine the exact amount you need to save and the timeline you have to achieve it.
Aligning investment goals with family needs and future plans is crucial. Consider your family’s financial situation, lifestyle, and future aspirations.
This includes evaluating the potential costs of education, retirement, emergencies, and significant life events such as weddings or family vacations.
By aligning your investment strategy with these needs, you can ensure that your financial planning supports both short-term requirements and long-term aspirations.
Investment Options for Parents
Parents have various investment options to consider, each with its own benefits and risks. Here are some popular choices:
- Stocks: Investing in individual stocks can yield high returns, but it also comes with higher risks due to market volatility. Stocks are ideal for long-term goals where you can weather market fluctuations.
- Bonds: Bonds are relatively safer investments compared to stocks. They provide regular interest payments and are less volatile, making them suitable for conservative investors looking for stable income.
- Mutual funds: These funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. Mutual funds offer diversification and professional management but come with management fees.
- Exchange-traded funds (ETFs): Similar to mutual funds, ETFs offer diversification but trade like stocks on an exchange. They often have lower fees than mutual funds and provide flexibility in trading.
- Real estate: Investing in real estate can provide steady rental income and potential appreciation in property value. However, it requires substantial initial capital and ongoing management.
- 529 college savings plans: These are tax-advantaged accounts specifically designed to save for education expenses. Contributions grow tax-free, and withdrawals for qualified education expenses are also tax-free.
Each investment option has its own set of benefits and risks. It’s important to diversify your investments to spread risk and increase the potential for returns.
Cheapest Monthly Dividend Stocks
Dividend stocks are shares in companies that regularly distribute a portion of their earnings to shareholders. Investing in dividend stocks can provide a steady stream of income, which can be particularly useful for parents looking to supplement their savings.
Monthly dividend stocks pay dividends every month, offering more frequent income than the typical quarterly dividend stocks.
The benefits of investing in the cheapest monthly dividend stocks include consistent income, potential for capital appreciation, and the reinvestment of dividends to compound returns. These stocks are attractive to investors seeking regular income and long-term growth.
According to Sure Dividend, some of the cheapest monthly dividend stocks offer high yields and have a strong track record of regular payments. These stocks are typically from stable, well-established companies with solid financials. Investing in these stocks can help parents build a reliable income stream to support their financial goals.
Creating a Diversified Portfolio
Diversification is a crucial strategy in investment to minimize risk and maximize potential returns. By spreading investments across various asset classes, sectors, and geographies, you reduce the impact of a poor-performing investment on your overall portfolio.
Diversification helps to balance risk and reward, ensuring that the performance of your investments is not overly dependent on a single asset or market condition.
To create a balanced and diversified investment portfolio, consider allocating your assets among stocks, bonds, real estate, and other investment vehicles. Within each asset class, diversify further by investing in different industries and regions.
For instance, in the stock portion of your portfolio, include a mix of large-cap, mid-cap, and small-cap stocks across various sectors like technology, healthcare, and consumer goods.
Rebalance your portfolio periodically to maintain your desired asset allocation and adjust for changes in market conditions and personal financial goals.
Involving Your High School Students in Investing
Teaching high school students about investing can have long-lasting benefits. It not only helps them develop financial literacy but also instills a sense of responsibility and the importance of long-term planning.
Early exposure to investing concepts can set them on a path to financial independence and better financial decision-making in the future.
Parents can involve their children in the investment process by starting with basic concepts like saving and budgeting.
Encourage them to set up their own savings goals and track their progress. Introduce them to the stock market by explaining how it works and discussing the performance of different companies.
Consider opening a custodial investment account where they can start investing small amounts under your supervision. Utilize educational resources like books, online courses, and investment simulators to enhance their understanding.
Tools and Resources for Investing
Several tools and resources can help parents start investing and manage their portfolios effectively. Here are some useful options:
Apps
- Robinhood: A user-friendly app that offers commission-free trading and is ideal for beginners.
- Acorns: Automatically invests your spare change and is a great tool for micro-investing.
- Stash: Provides personalized investment guidance and fractional share investing.
Websites
- Morningstar: Offers in-depth research and analysis on stocks, mutual funds, and ETFs.
- Investopedia: A comprehensive resource for learning about various investment concepts and strategies.
Books
- “The Intelligent Investor” by Benjamin Graham: A classic book on value investing.
- “Rich Dad Poor Dad” by Robert T. Kiyosaki: Provides insights on financial literacy and investing.
- “A Random Walk Down Wall Street” by Burton G. Malkiel: Explains investment strategies and market behavior.
Achieve Financial Independence to Secure Your Future
Achieving financial independence and securing a stable future for your family starts with early and informed investing.
By understanding financial independence, setting clear investment goals, exploring various investment options, and creating a diversified portfolio, parents can build a strong financial foundation.
Involving high school students in the investment process not only educates them but also prepares them for financial success.
Utilize available tools and resources to enhance your investment strategy and stay informed.
Start taking the first steps towards investing early to ensure financial independence and support your children’s future. With careful planning and disciplined investing, you can achieve your financial goals and provide a secure, prosperous future for your family.
by Melissa Brock | Jul 11, 2024 | Ask the admission office |
Nothing beats the rewarding experience of getting that degree after years of hard work. However, the uncertainty of what comes after can also be nerve-wracking. As fresh graduates step into the world of adulthood, it’s important to have the best resources to navigate life, and one way to do that is by managing finances wisely.
Money management isn’t always a walk in the park, especially for fresh graduates. In the U.S., 51% of college graduates during the 2021-2022 period finished their studies with an average of $29,4000 in student loan debt, according to a CNN report. Saving up can be difficult when you start your 20s dealing with debt, but luckily, several resources like e-books can help you familiarize yourself with the nitty-gritty of finances and saving. If you’re looking for tips for getting on top of your finances, here’s a fresh graduate’s guide to the best e-book resources for money management.
Why E-Books, and Where Can You Find Them?
According to a National Institutes of Health study, students tend to prefer e-books because they’re accessible, convenient and can be downloaded and carried around. A Computers and Education study also mentioned that the interactive features of e-books, such as annotation functions, can enhance the reading experience.
While e-books are available on a variety of platforms, fresh grads on a budget will want to focus on just one to save both time and money. You can find a wide range of resources in Everand’s finance and money management category, such as Jesse Mecham’s “You Need a Budget” and Benjamin Graham’s “The Intelligent Investor” if you want to be financially wise.
These e-books are accessible through a reasonably-priced monthly subscription that’s often less than the cost of one physical book. Convenient and affordable options like these can make it easier to practice proper money management.
You can also find resources on OverDrive, where you can browse through your local library’s e-book catalog to learn the best insights on how to make the best money-saving decisions. Having easy access to helpful financial information can help kickstart a fresh graduate’s journey to managing and saving money in the long run. That said, here are some of the best e-books that can help college graduates learn about effective financial management strategies.
E-Books on Money Management for Fresh Graduates
Let’s take a look at a list of the best e-books on money management for anyone just graduating.
“The Money Book for the Young, Fabulous, and Broke” by Suze Orman
In our previous article on “Financial Planning Tips,” we mentioned Suze Orman’s classic work “The Money Book for the Young, Fabulous, and Broke” as a key source that can help you invest in financial education.
This New York Times bestselling title mentions some of the harshest financial realities that young people may encounter. It provides a realistic financial guide for how to properly manage money, deal with debts, and save for the future. It’s a perfect read for fresh college graduates looking to prepare for future financial challenges as they build their careers or future from scratch.
“Why Didn’t They Teach Me This In School?” by Cary Siegel
If you’re looking for an e-book that has more than enough information on managing money, then Cary Siegel’s “Why Didn’t They Teach Me This in School?” has you covered. The e-book contains 99 useful financial principles and advice that can help fresh college graduates improve their financial decisions so they can be debt-free and save enough money for the future.
As the title suggests, these money management tips are not typically taught in schools yet remain relevant in navigating the first few years of adulthood, so it might be best to give it a try. After all, it wasn’t recommended by Forbes, LifeHacker, and eBay as one of the best graduation gifts for college students for nothing.
“The Simple Path to Wealth” by J.L. Collins
Investing for the future need not be complicated, and that’s exactly what J.L. Collins’ “The Simple Path to Wealth” tries to say. More than an e-book, it can serve as a bible that provides simple yet crucial advice to achieve financial success based on Collins’ experiences.
These tips include saving 50% of your income, staying away from debt, and investing in index funds. The e-book also stays true to its title since it’s short and easy to read, but packed with loads of advice that fresh graduates can follow as they begin building their journey toward financial independence.
“Broke Millennial Takes on Investing” by Erin Lowry
Young people’s financial literacy rates are below 50% worldwide, according to a World Economic Forum report. This highlights the need for improved financial information, and Erin Lowry’s “Broke Millennial Takes” might do the trick.
The e-book provides basic yet hands-on details on investing, including some terminologies that might confuse fresh graduates who are looking to invest or save up money. It teaches young adults how to buy and sell stocks, when’s the best time to invest, and tips on managing student loan debt. This is a great read to help young adults get started on the basic steps of investing.
“Your Money or Your Life” by Joe Dominguez and Vicki Robin
Reading Joe Dominguez and Vicki Robin’s work, “Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence” can still provide fresh graduates with useful insights despite being first published more than two decades ago.
The classic work mentions helpful tips to manage your money properly, such as creating and following strict financial habits. The nine tips outlined in the e-book can guide fresh college grads to achieving financial independence in the long run by learning how to avoid debts and not getting too carried away with overspending whenever pay slips come in.
“I Will Teach You to Be Rich” by Ramit Sethi
Ramit Sethi’s “I Will Teach You to Be Rich” is a good read for young adults looking to pay off their student loan debts and learn the fundamentals of investing. Sethi provides real-world critical advice so readers can become successful in banking, budgeting, investing, and saving.
The e-book has strategies on how to invest properly without paying a financial advisor, as well as tips on buying a house and other big purchases that fresh college grads may be thinking of in the future. This is perfect for fresh graduates who are in their wealth accumulation phase and want to be wise in their financial decisions so they can enjoy financial freedom.
The real world can be overwhelming for fresh graduates, especially with looming financial responsibilities on the horizon. Reading these e-books can help young adults make responsible financial decisions to help them manage and save enough money for the future.
by Melissa Brock | Jul 1, 2024 | College Money Tips |
If your child has just graduated from college or the date is approaching, you (and they) are likely excited and nervous about what comes after. As I’ve advised hundreds of families on preparing for college, I can also give you a few tips for after they get their AA or BA — tip number one is to take a deep breath.
Both of you can absolutely do this.
Here are some college graduate finance tips to deal with debt, uncertainty, and the world of personal finance. The sooner they start planning their finances, the sooner they’ll be planning trips, new car specs, and, hopefully, decor for their own home.
1. Invest in Financial Education
You know dealing with your finances takes a lot of skill, and you want to help your kid deal with the anxieties of starting out. Here are some financial education resources to take advantage of:
- Books: Start with Suze Orman’s classic, The Money Book for the Young, Fabulous and Broke or Cary Sieagal’s Why Didn’t They Teach Me This in School?: 99 Personal Money Management Principles to Live By.
- Online courses: Direct them towards online courses on personal finance through platforms like Coursera or Khan Academy
- Finance blogs and podcasts: Point them to reputable financial blogs and listen to podcasts that focus on budgeting, saving, investing, and other financial topics.
- Workshops and seminars: If you find a link to financial literacy workshops and seminars offered by community organizations, schools, or local banks, share it with your kid. (If you think they’re interested, of course.)
2. Educate Them on Managing Student Loan Debt
CollegeMoneyTips has all the resources for handling student loan debts for parents and graduates, so check out articles on home equity loans and other financial tools such as refinances.
The rest is up to your child. Make sure they understand the terms of their loans, including interest rates, repayment plans, and grace periods. Here are some basic tips:
- Consider consolidating or refinancing loans for a lower interest rate.
- Make extra payments when possible to reduce the principal balance faster.
- Check out income-driven repayment plans with Federal Student Aid.
3. Build Good Credit
If your child has student loans, there is one more reason to pay them on time: building good credit. A good credit score can help them secure a loan, rent an apartment, or get a job. According to Experian, the average American has a score of 715, but anything over 670 is considered good. For starters, they can even have a fair credit score.
Besides paying student loans on time, teach them about other ways to build a solid credit score:
- Getting a secured credit card, using it for small purchases, and paying off the balance in full each month (you can help them with this).
- Paying utilities and other bills on time (and using automated payments in their banking app to do this)
- Encouraging them to monitor their credit report, check for errors, and make sure their credit history is accurate.
4. Build an Emergency Fund
I understand the economy isn’t really helping young adults leave money aside each month, but that does not mean they should give up on saving altogether. If your child doesn’t use change rounding apps or automated transfers to save, there’s a simple starting point.
With time, they should be able to save for at least three months of living expenses, which is considered a minimum emergency fund. It’s a lifesaver in case of unexpected medical expenses, repairs or additional certification opportunities.
5. Prepare the Ground for Future Homeownership
I know, they’ve just started and may be in debt, so even broaching the topic of homeownership with them may feel like you’re getting ahead of yourself. Still, preparing for it ahead of time isn’t such a bad idea. Stats show the youngest generations have particularly poor financial literacy skills, so try to motivate your child with a clear goal.
Here is what you can talk to them about:
- Student loans: Student loans impact people’s borrowing power significantly, but they do not stop them from purchasing a home. They do affect eligibility, though: debt impacts everyone’s debt-to-income ratio, which is a key requirement. While the ideal DTI is 36%, some lenders allow DTIs of up to 50%.
- Researching mortgages: With low-to-moderate income, they can go with government loans such as FHA loans. If they’ve been in the military, VA loans can help them get a home without a down payment. For homes that are a bit more expensive or young adults who have been gifted down payments, a conventional mortgage (that is, a regular loan not insured by the government) may be a better choice as it may have lower interest rates.
- Co-signers: If your child has a steady job and a regular income, and they’re set on buying a home sooner, you or another family member can help them qualify by being their co-signer.
- Assistance programs: As a first-time homebuyer, they have the right to plenty of federal- and state-funded down payment assistance programs.
Finally, if you want to get them a highly useful gift, you can always schedule a talk with a certified financial advisor — they will help them reach their goals, whether it’s paying off student loans, buying a home, building savings or even investing (time is the magic ingredient that makes investments grow!).
And last but not least, congratulations to you and your child for making it through college.