Grad Ready

Managing your money is a personal skill that benefits you throughout your life – and not one that everybody learns. With money coming in and going out, with due dates and finance charges and fees attached to invoices and bills and with the overall responsibility of making the right decisions about major purchases and investments consistently – it’s daunting.

You would think that because the stakes are so high that this would be a skill that gets taught in high school (or even before), but that’s not the case. Managing your own money requires a fundamental understanding of personal credit and a willingness to embrace personal responsibility. That is, you pay your bills in a timely manner and you don’t drown yourself in debt. You accept the fact that sometimes you have to sacrifice immediate demands and desires for long-term gain.

You budget. You save. You protect your savings. When you spend, you spend wisely. When you make big purchases, you do so for things that are worthwhile.

You understand the difference between good debt and bad debt. And you constantly pay attention to your overall portfolio — earnings, savings and investments. You also understand what you don’t know, and you ask for help when you need it.

To be financially literate means having the ability to not let money – or the lack of it – get in the way of your happiness as you work hard and build an American dream complete with a long and fulfilling retirement.

How to Manage Your Money

Handling your finances the right way should be a priority, and it should drive your daily spending and saving decisions. Personal finance experts advise taking the time to learn the basics, from how to manage a checking or debit account to how to pay your bills on time and build from there.

Managing your money demands constant attention to your spending and to your accounts and not living beyond your financial means.

Money in the Bank


Developing financial acumen starts with opening a bank account. Once you have a paycheck, set up direct deposit. This keeps your money secure and saves you from paying interest to cash advance companies which charge a percentage of your check.

Having a bank account provides convenience, access to a choice of benefits and safety. Checks and debit cards offer proof of payment so you have a record of transactions showing where your money goes. The FDIC insures money in a savings account for up to $250,000.

There are a number of options for the type of primary account for saving your paychecks. Most people choose a checking, debit or savings account or combination of those. These enable you to set up automatic payments for monthly bills and offer the ease of not having to carry cash around. Each option comes with certain benefits and disadvantages. Evaluate the various overdraft, monthly, withdrawal and other maintenance fees accompanying account options.

Experts recommend you have a savings account which you can use for handling unexpected financial expenses and emergencies, such as a broken arm, flat tire or hike in school tuition.

Choosing to only open a checking or savings account can be a poor choice, as having the two types of accounts separate helps distinguish between money available for immediate spending and reserves, intended to be kept for the long-term. Keeping all your money in a checking account means your savings are easily accessible and available to spend. You will miss out on interest generated by a savings account.

With money in an account, you can start spending. This is where you need discretion. Learn to differentiate between necessities and luxuries. For example, you need to pay for your yearly dental cleaning, but you want to afford the salon appointment. Take advantage of mobile banking to get updates on how much you are spending and how much remains in your account.

The best way to leverage the cash you have in your bank account will be to start budgeting immediately.


One of the first building blocks of a successful personal finance plan is the ability budget. Although it’s easy to understand, it’s also difficult to do because it requires a hard look in the mirror and a willingness to see what really stares back at you.

Budgeting requires that you analyze and, likely, change your spending habits. Instead of your money controlling you, you control your money. Develop habits to save, avoid financial crisis and maintain peace of mind.

A successful budget plan clearly defines:

  • How to follow a monthly spending plan
  • Ways for lowering your monthly bills
  • How to handle accrued debt
  • Debt pay-off options like the snowball and avalanche methods
  • How to distinguish between short-term, medium and long-term goals
  • A breakdown of family needs

Credit or Debit?


In addition to cash and a bank account, most people own some type of plastic, like a debit card, credit card or combination of the two. What you do with these tools has serious repercussions on your ability to establish credit history and to avoid developing a borrowing habit.

Conservative financial experts recommend either having only a debit card or having both with the credit card reserved for occasional major payments and then immediately paid off. This advice is often given to people who have accrued a large amount of debt.

Starting out with one of each card can help you develop responsible spending habits and provide convenience. Consider the rewards offered by both cards, especially if you travel or make large purchases often.

The main advantage of only using a debit card regularly is you spend money you already have. Debit cards can be tied to your checking account where paychecks are automatically deposited.

Debit cards have benefits like no limit on the amount of transactions and rewards based on frequent use. You have the ability to spend without carrying cash and the money is immediately withdrawn from your account.

Because using the card is so easy, it is vital that you don’t overspend and lose track of how often you’re spending with this account. If you’re not paying attention, overdraft fees can drain your account.

Some hotels, car rental companies and other businesses require that you use a credit card. Getting an account designed for occasional use can be a wise decision. You can establish your credit history and take advantage of the time buffer between making a purchase and paying your bill. Another advantage of using credit is the added protections offered by the issuer. For online shopping and larger purchases, a credit card can be a safer option than a debit card.

Relying on a credit card can lead to taking on serious debt. Should you choose to own credit card, the best method of action is paying in full every month. It is likely you will already be paying interest on your purchases and the more time you carry over a balance from month to month, the more interest you will pay.



Saving is an essential component of good budgeting. Using a savings account allows you to prevent emergencies from draining the money you need for monthly bills and slowly build a reserve for making large future purchases. This reserve can be used for car repairs, apartment deposits, unplanned surgeries and other medical needs and even gathering funds for a home down payment.

Some facts about saving:

  • 67 percent of Americans have less than 6 months of expenses in savings
  • From 2011-2014, 24 to 28 percent of Americans had zero emergency savings
  • People ages 30 to 49 are the least likely to have emergency savings
  • 1 person out of every 5 people near retirement age has zero money saved (Federal Reserve)

Make a financial commitment that you can keep, even if it means starting small, like $50 from every paycheck or cutting out your gym membership for an extra $100 a month. Remember, this account isn’t for splurging on the latest Apple product or a Michael Kors purse. Be intentional about only using your savings for needs. Whenever you take money out, do your best to quickly replenish the withdrawal.

Developing consistent savings habits allows you to leverage time, your age, your current resources, compounding interest, investments and tax-advantaged savings.

Saving tips:

  • DO set up a portion of your paycheck to automatically go to savings
  • DON’T leave a savings account as your last financial priority



The trend of personal debt in America over the past four decades shows a slow but steady climb.

A December 2014 Federal Reserve study revealed the average U.S. household has:

  • $15,611 in credit card debt
  • $155,192 in mortgage debt
  • $32,264 in student loan debt

In February 2018, Experian released its annual national average VantageScore, a representative credit score, was 675, up from 666 in 2014.  Still, it’s much lower than the 800 rating that qualifies to get the best interest rates when it comes time to buy a house or car.

The report also said the average consumer has a credit-card balance of $6,354.

Total Debt for American Consumers = $11.74 trillion

Credit Scores


A credit score can be a strong indicator of your financial well-being. Equifax, Experian and TransUnion are the primary credit bureaus and assign scores ranging from 300 (high risk) to 850 (low risk). The bureaus determine scores based on a group of factors which reflect your spending habits.

Never underestimate the importance of credit scores. Once you are spending money with plastic and paying bills regularly, you begin your history. This record of how often you borrow, how quickly you repay and how much you owe can follow you throughout your life.

Credit Score Checklist

  • Make sure you know where you stand and address the blemishes on your credit reports.
  • You can obtain a copy of your credit report for free once every year from each of the credit bureaus.

Building a high credit score can help you get approval for low-interest loans, credit cards, mortgages, and car payments. When you are looking to move into an apartment or get a new job, your credit history may be a deciding factor.

On the other hand, making late payments on bills, missing payments, piling on debts and regularly maxing out your credit card can result in seriously lowering your credit score. Just as an excellent score can give you access to loans, jobs and more, a low credit score can prevent you from being able to borrow more, pay low interest rates and even get certain jobs.

Using Credit Responsibly

Using credit cards is a way of life for most Americans. For some, it’s a tool for building credit and borrowing money for major purchases. For other, it’s a constantly refilling debt relied on for nearly every purchase.

How many credit cards do you have? Experian’s eighth annual State of Credit Report, issued in February 2018, shows consumers have an average of three credit cards.

Learning how to use these tools wisely has a major impact on your future, as potential employers may review your credit history and credit scores can be used to qualify you for better interest rates when it comes to loans, mortgages and applying for more credit.

Choosing the Right Card

Many credit cards require you meet a minimum credit score for approval. The higher your score, the more perks you will qualify for, like low interest rates and a high credit limit. If you are a student you may qualify for special rates. Decide before you apply for a card what your plan for using the card will be. Pay attention to introductory promotions which may expire after six months to one year of owning a card.

Making a Game Plan for Credit Use

Plan before you spend. You can become a responsible credit card owner by marking your calendar to avoid missing or being late for paying credit bills. Another precaution against getting in a borrowing hole is making sure you do not spend money you cannot repay and keeping your balance well below the limit for your account. Ask questions. Are there points you will earn for regular use? Is the APR affordable? What kind of limits will you have? Find out what the fine print means before racking up debt you won’t be able to repay.

Paying Off Credit Card Debt

Getting control of your credit card debt requires taking a good look at how much you owe. Take a deep breath and evaluate what you can afford. You likely will need to define a long-term strategy for chipping away at the total amount you owe while ensuring you don’t dig yourself deeper into debt. Talk to creditors to find if they can work with you to make a plan that works. Only look into consolidation and settlement as a last resort.

Student Loans


Student loan debt is almost as routine today as a car loan or credit-card debt. Few college graduates leave school without some sort of student loan to repay.

Most students don’t ask if they’ll go to college, but rather where they will go. And it may not be until a few decisions later that they consider how to afford tuition. Years later, when school ends and real-world living begins, the afterthought of student loans takes its toll and the bills start rolling in.

Student Loan Facts

  • 40 million Americans have at least one outstanding student loan (Experian)
  • Americans owe a more than $1.2 trillion in debt, making up 6% of the total national debt
  • The average borrower graduates owing $29,000

Paying Attention to Loans While You’re Still in School

In addition to signing the promissory note for your loans, take the time to examine exactly when your first payment will be due and how much it will be. Put that future date and cost on paper and in the time between now and then, begin saving money to repay your loans. If you can work a few hours during the week, on the weekends or just holidays and summers, you can begin your post-college years with a surplus of money that can go directly toward loans.

Do's & Don'ts

  • DO find out when your grace period ends
  • DON’T miss your first payment because you forgot to mark your calendar

Staying in Control When You Leave or Graduate

When the time to start paying comes, you have options for repayment. The Federal government offers longer term payment plans as well as graduated repayment options which allow you to bulk up your income and get some job experience under your belt before making larger monthly payments. From there, your next step will be making payments on time and reducing the principal if possible by paying more than the minimum that is due. For public service careers, you may qualify for loan forgiveness.

Do's & Don'ts

  • DO make more than the minimum payment to reduce your principle
  • DON’T skip payments or accrue late fees

When Repayment Isn’t an Option

During certain seasons of life, your income may be severely limited and affording student loan payments just isn’t possible. Fortunately, loan servicers are aware that situations like this occur and have precautions in place to help students get through these difficult times. Qualifying circumstances, like unemployment or health problems, can make you eligible for deferment or forbearance, which allow you to temporarily postpone or reduce payments. Contact your loan servicers to find out your options. If you just ignore loan bills, your account may receive delinquency or default status.

Do's & Don'ts

  • DO communicate with lenders if you are unable to make payments
  • DON’T ignore student loans when you’re struggling financially