AUBURN UNIVERSITY, Ala. — Graduating from a high school, trade school, community college or university marks a rite of passage into a new level of adulthood. Many graduates face major financial decisions for the first time, from student loans and credit cards to savings and retirement accounts.

Russell Lowe, a financial management agent with Alabama Extension at Auburn University, said developing strong money habits early can have long-term benefits.

“Making wise financial decisions after high school and during college will pay dividends,” Lowe said. “Avoid that desire to keep up with the Joneses. Set realistic and achievable financial goals for yourself, and the rest will work itself out in due time.”

To help establish a good financial foundation, Lowe shared the following tips for graduates as they move from school into adulthood and the workforce.

Starting Strong After Graduation

Graduation celebrations often feature gifts of cards and cash. Lowe said it is smart to set the majority of these financial gifts aside.

“Start a savings account early,” Lowe suggested. “Having a rainy-day fund means you’re better prepared for life’s little surprises. Those always come when least expected. If it’s possible, save 70% to 80% of what you receive for graduation. Then, enjoy the rest, but also consider if you could use it for a purchase that will benefit you long-term.”

For those continuing their education, Lowe said the next steps are selecting a field of study and considering its costs, especially potential student loan debt.

“Be sure your major can lead to a career that will sustain the way of life you want,” Lowe said. “For student loans, it’s a good rule of thumb to only borrow what you need to cover the cost of your education. That helps limit debt exposure after graduation.”

Throughout College and Into a Career

In Alabama, 19-year-olds can apply for a credit card in their name. That means this period of life often coincides with an onslaught of credit card offers. While establishing credit early on is important, Lowe said young adults should proceed with caution.

“Trying to live a life beyond your means can lead to credit card debt before you even start your career,” Lowe said. “Your credit score will follow you the rest of your life. It will either help or haunt you, so make responsible financial decisions. Live within your means and pay your bills on time to maintain a good credit score. That can make it easier to buy a vehicle or qualify for your first home loan.”

Once entering the job market, many employers offer retirement accounts. Lowe said the benefits of contributing to a company 401(k) plan compound quickly.

“Statistics show that opening a 401(k) plan in your early 20s will lead to substantial savings once you reach retirement age,” Lowe said. “That could make it possible to retire comfortably as a millionaire. Compounding interest is a beautiful thing. Also, make sure you maximize the employer match contribution to your retirement account.”

Reaching Financial Goals for Age 30

Financial habits formed during the late teens and early 20s can provide long-term stability. Lowe said young adults should focus on limiting debt, building savings and setting realistic goals.

“By the time you’re 30, you should have an honest understanding of wants versus needs,” Lowe said. “Driving a used car instead of a new one can help reduce debt. Plus, continuing to save can move you closer to achieving the American dream of homeownership. It’s also important for couples to set goals and discuss financial expectations for their family.”

Learning Even More

Alabama Extension offers financial education for people in all stages of life — from just starting out to retirement and beyond.

“A lot of what we do as financial management agents is helping Alabamians make wiser choices to provide a brighter future for themselves and their families,” Lowe said. “I hope those interested in learning more will join us for a WISE Money class in their area.”

To find an upcoming WISE Money program, visit aces.edu/calendar. The WISE Money Calendar from Alabama Extension can also help people set and track financial goals.