This spring, millions of college graduates will exit the stage with diplomas in hand to embark on careers; and for some, financial independence. But financial literacy is a subject that receives too little attention, especially from young adults. Teach your young adults personal finance tips—such as creating a budget—and how to take the first step toward building solid financial futures.

Mindful spending

It’s important to know where money is going—and where it should be going. Mindful spending means setting realistic goals, having awareness of the full financial picture, and knowing when to cut back and when it’s OK to spend.

Keep it Simple: One checking account for bill paying, and one savings account for emergency funding. Set aside enough cash to cover essential expenses for three to six months.

Living within your means

Everyone needs to make sure they have enough to live on by assessing needs vs. wants. Start with your take home pay, then subtract essentials like contributions to savings, rent, transportation, groceries, utilities, and payment to student loan payments, if applicable. What’s left is the amount for discretionary spending.

Automate as much as possible: Have your paycheck automatically deposited into your checking/bill paying account. Automate your monthly savings. Start with a small amount $50/month and go up from there. Automate your bill paying for recurring bills.

Credit card debt

Using a card helps build credit, as long as the credit card can be paid off each month. Having a single card may be easier to manage.

Student loan payments

Fees and penalties can add up. Consider repayment options—and always paying at least the minimum due each month. is a good resource for more information on how to repay student loans as well as loan forgiveness programs for certain types of work.

Comprehensive health insurance

Employer-sponsored health insurance should be taken advantage of, if possible. If that’s not available, consider a low-cost, high-deductible policy. Maintaining a health savings account (HSA) offers an additional benefit of setting aside pre-tax funds for health care expenses.

Retirement accounts

An employer 401(k) plan should be taken advantage of, if possible. Consider contributing at least enough to get the full company match, if offered. When a traditional 401(k) or a Roth 401k are not available, a Roth IRA might be worth researching. It’s important to read the fine print regarding eligibility and contribution and deductibility limits.


After making the maximum contributions into either a traditional or Roth 401k, IRA, or Roth IRA, and after reaching the targeted emergency savings goal, then you can begin with investing in an Individual investment account. When starting at $0 or low amounts, focus on Lifetime Retirement/Target Allocation funds. They offer the best diversification option at the best value.

2 gift ideas to help new grads become future investors

A 2017 study showed that Americans planned to spend upwards of $5.6 billion on graduation gifts—more than half of it cash.5 Perhaps, though, what the next generation really needs is guidance on becoming self-reliant, financially responsible adults.

Match savings contributions. Opening a savings account can open the door to developing a savings habit. Parents can make the initial deposit and match a portion of their graduate’s contributions. (Note: In 2018, you can give up to $15,000 per recipient without incurring the gift tax, $30,000 if you’re giving as a couple).

Fund (or match contributions to) an IRA. Opening a tax-advantaged Individual Retirement Account (IRA) could be the right move if the graduate is freelancing or ineligible for a 401(k) through their employer. Roth IRAs, funded with after-tax dollars, offer tax-deferred growth and tax-free withdrawals, and are a practical option for those with smaller incomes.