At graduation time, many students are feeling proud of their accomplishments and happy to see the end of years of study.
At the same time, many are looking forward to starting their first professional job. Once they find a job and take a new position, they find there are many more choices to make about planning their life, including decisions about health care, wellness benefits and saving for retirement.
Entering the workforce after graduation is a major life milestone. Onboarding at the new job can be complicated and daunting.
In these moments, it may be wise to start a new job with a plan in mind, one that includes some overall goals for your career and finances.
It’s important to start with good financial habits to build a strong foundation for the future.
Here are some useful tips for new graduates to consider for building their financial life:
- Set goals. Consider short-term and long-term financial goals. Try to automate as much as possible to meet those goals. Put bills and loans on autopay, create automatic transfers to save toward big-ticket future items like a house, car or trips.
- Create a budget based on your take-home pay. Consider the details to account for all likely expenses. A solid budget is key to starting off on a strong path to avoid credit card debt. Incurring debt that exceeds one’s budget plan can severely impact the ability to succeed and meet important goals while potentially having long-term costs. Creating a budget can help individuals set both short-term and long-term financial goals.
- Build and maintain good credit. Creating a good credit history is a valuable financial resource for the future. For example, consider the cost of obtaining a mortgage. Even a modest difference in credit score can help a borrower secure a more competitive interest rate, potentially resulting in significant long-term savings over the life of a loan due.
- Prioritize student loan payments. Identify when student loan payments start and incorporate these payments into a budget. Today, more than 42 million borrowers owe some $1.6 trillion in student debt, and some five million are in default, according to the Department of Education. Seek help from a financial professional if potential of default is a concern, as penalties could impact one’s savings and credit rating. Lastly, inquire as to whether a current or potential employer offers benefits around student loan repayments.
- Pay down credit card debt. If a student relied on credit cards for expenses during their school years, it may be an opportune time to reduce debt. With higher earnings at a time when living expenses may still be low, consider adding extra to credit card payments to try to get ahead of interest and pay down the balance. Managing debt is a critical part of building a good credit rating.
- Calculate housing costs. Many pundits suggest allocating no more than 30% of your gross monthly income to rent and utilities. Money not spent on rent can be potentially allocated toward savings, paying down debt, or establishing an emergency fund. Depending on circumstances, is there an opportunity to live at home for a few months to build up some savings?
- Set up an emergency fund. Try to cover three to six months’ worth of expenses to avoid a potential financial setback if you face a financial or health-related emergency. Recent legislation allows retirement plan sponsors to offer an emergency savings account option, check with your employer to see if this is available or is being considered.
- Get informed about employee benefits
- Carefully research your benefits package. The employer handbook is a good place to start. For many employees, accessing these benefits has significant financial value. Reach out with questions and take advantage of support services offered by your employers. Find out if some benefit decisions can be changed in the short term or if the choices you make cannot be changed until the next enrollment period.
- If offered, participate in an employer retirement plan. If the plan has an employer match, then contribute at least up to the match. Even if you're stretched financially, start with a modest salary deferral and aim to increase it gradually. For example, many 401(k) plans have an “auto escalation” feature that increases your contributions each year. If available, consider utilizing financial wellness services offered by your employer to make investment choices. Also, find out how frequently you can make adjustments or change allocations in your retirement account.
- As many younger plan participants have less income than they will in later working years, it’s worth considering a Roth account – whether through a workplace plan if available, or via a Roth IRA. The value of making pre-tax contributions will vary depending on the individual’s marginal tax bracket. For those in lower tax brackets, the relative value of making pre-tax retirement plan contributions is less. Qualified Roth distributions are tax-free.
- There may be several health insurance options to explore. Consider a high-deductible health plan and fund a health savings account (HSA) which provides unparalleled tax benefits if funds are used for qualified health-related expenses. In HSAs, contributions made are tax-free, funds can grow tax-free if invested and qualified distributions are tax-free.
- Individuals under the age of 26 may be able to save some money by remaining on their parent's group health insurance plan.
- Employers may also offer life insurance. Find out if the plan is portable; that is, can the employee take it if they leave the job. If not, it may be a good time to explore purchasing a private life insurance plan. Having life insurance may not appear to be a priority, but in the future, life insurance can become more essential. It can also cost more as an individual ages.
- Consider workplace plan features such as commuter benefits, which allow payment of those expenses with pre-tax dollars.
- Explore banking and credit opportunities. Look for low-cost banking and credit card solutions and set up direct deposit for payroll. If a graduate already has a bank account with student benefits, find out if these benefits end upon graduation. It may be time to explore alternatives at a variety of banks.
- Be aware of the 0% capital gains rate. Taxpayers in the two lowest tax brackets (10% and 12%) can benefit from a 0% tax rate on long-term capital gains, assuming the amount of the gain does not add enough income to push them into higher tax brackets. For example, this may allow for a sale or exchange of appreciated mutual fund shares without tax consequences. For more information see “2025 tax rates, schedules and contribution limits.”
For 2025, individuals with taxable income below $48,475 ($96,950 for married couples filing a joint tax return) benefit, remember that taxable income is calculated after deductions are applied, the standard deduction for single filers in 2025 is $15,000.
Lean into advice and wellness programs
It’s exciting for students to graduate and secure their first professional job. It may be their first job that offers multiple benefits. At the same time, employees may find starting a new job can be overwhelming with all of the decisions that need to be made, particularly around income, savings, and retirement. New graduates can reach out to their human resources representative at work, and attend the online or in-person onboarding sessions to learn about and enroll in benefits. It’s important to read the materials shared about the benefits, including insurance and investment options. Ask questions. Some companies offer access to financial professionals for guidance as well as financial wellness programs.
In its 2025 “Voice of the American Workplace” survey, Franklin Templeton found financial independence is a persistent priority among workers. In fact, 91% of employees surveyed see their financial goals as a pathway to independence, not just security. (See About the Survey).
To achieve long-term goals, it’s important to start off on strong financial footing.
About the survey
Research methodology. The Voice of the American Employer Survey was conducted by The Harris Poll on behalf of Franklin Templeton from November 25 to December 6, 2024. All 1,002 respondents, based in the United States, are classified as employers, defined as having at least some influence over company benefits and/or hiring at organizations with over 100 employees. Respondents represent a mix of industries, company size, role, age, and race.
The Voice of the American Worker Survey was conducted by The Harris Poll on behalf of Franklin Templeton from November 27 to December 10, 2024, among 2,018 employed US adults. All respondents had some form of retirement savings. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.