NEW YORK (AP) 鈥� With graduation season over, many college grads are embarking on summer internships or their first full-time jobs. Navigating your finances when you start adult life can be challenging, from understanding your health insurance and benefits to managing a budget.
is often the first hurdle, so if you've accomplished that, take a moment to be proud of yourself.
鈥淥nce you do get that first job, pat yourself on the back," said Nick Holeman, director of financial planning for Betterment, a financial advisory company.
Then it's time to think about your financial future. With and , it's more important than ever for recent graduates to start their adult lives on the right financial track.
Here are recommendations from experts about how to do that:
Pay attention to onboarding instructions
Getting your first job is exciting, but the onboarding process can feel overwhelming. When you start a new job, most companies offer guidance about benefits such as your 401(k) and health insurance. It's a lot of information, but it's important not to ignore it, Holeman said.
One key thing to focus on is your employer-sponsored retirement plan. While many companies you, Holeman recommends you save more than the typical 2% to 3%. Automatic enrollment allows your employer to take a set amount from your paycheck to allocate to a retirement investment account. You can choose to opt out or increase the amount you contribute.
鈥淏ecause you鈥檙e automatically enrolled doesn鈥檛 mean you can鈥檛 go in and increase how much you鈥檙e contributing," he said. 鈥淎nd that鈥檚 a great way to build those automatic savings habits that around going to take you throughout the rest of your career.鈥�
Figure out your health insurance
Some recent grads might stay on their parents' health insurance while others might enroll in an employers' health insurance plan. But if your job doesn鈥檛 offer health insurance, experts recommend you enroll in the .
鈥淵ou shouldn鈥檛 go uninsured if you are going to be working for an employer that doesn鈥檛 offer health insurance,鈥� said Louise Norris, health policy analyst for healthinsurance.org.
While you鈥檙e navigating the ACA鈥檚 marketplace, you must take into consideration your budget, health, and availability of doctors in your area. If your employer offers several health insurance plans, Norris recommends learning the details of the plans, such as your deductible, co-pays and use policy.
If you鈥檙e generally healthy and don鈥檛 go to the doctor often, Holeman recommends you choose a high-deductible health plan, because it will allow you to save money in a , also known as an HSA. An HSA lets you set aside pre-tax money to pay for medical expenses, which can help you cut out-of-pocket costs when you visit the doctor.
Save for emergencies
Emergencies are tough to prepare for because you never know when they will happen and how expensive they will be. However, it鈥檚 a good practice to have an emergency fund that will alleviate some of the financial burden if something goes wrong.
鈥淭hink of your emergency fund as a 鈥榖reak glass in case of emergency,鈥欌�� said Holeman, who recommended that you keep your emergency savings in a separate bank account.
Emergency fund amounts vary depending on each person鈥檚 circumstances but Holeman recommends that you save three to six months of expenses. This is an ideal scenario, but any amount of savings can be helpful in case of an emergency.
Manage your credit card usage
Credit cards can help build your credit score and develop good borrowing habits, but if not used carefully, they can also get you in a lot of debt.
If you鈥檙e taking out your first credit card, Holeman recommends that you choose something that you can keep for a long time, since an important factor in is the length of your credit history. Holeman recommends your first credit card is one that doesn鈥檛 have a yearly fee and is easy to maintain.
If you鈥檝e had a credit card before, remember that to maintain a good credit score and not fall into credit card debt, you must pay off your balance on time every month. It鈥檚 best if you use your credit card to pay for things you can already afford, recommended Steve Pilloff, associate professor of finance at Costello College of Business at George Mason University.
鈥淯se it as a way to make payments rather than a way to borrow money. Focus on the card and not the credit,鈥� Pilloff said.
Adjust your budget
of your financial life, whether you鈥檙e trying to save for your emergency fund or pay down debt.
Budgets change along with your finances, so when you land that first full-time position and maybe move to a new city, you need to change your budget to reflect your current financial reality, Pilloff said.
If you鈥檙e using your budget to find ways to cut costs, Holeman recommends you focus on big expenses, or transportation costs, rather than small ones such as coffee or shopping. If you have debt, Holeman also recommends you first focus on paying off high-interest debt. If you don鈥檛 have debt, focusing on building an emergency fund and saving for short-term goals is also a great place to start setting goals for yourself.
Budgeting is not a one-time process. In order to achieve your financial goals, you have to continuously assess and adjust, Pilloff said.
With apps like and , you can access and easily modify your budget at any time. However, the best way to stick to a budget is finding the format that best works for you, whether that's an Excel sheet or a notebook.
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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Adriana Morga, The Associated Press
