smart spending

A grad's guide to fiscal fitness

"More and more students are doing that," Draut says. "It's lost its stigma and is a good way to get on good financial footing. If you grew up in a major urban area, can live with your parents and can get started on that career, it's the best financial decision you can make. Live with your parents for a year or two, pay down the credit card debt, make headway on student loans, and create savings."

For those who can't do that, it's a more difficult task. Draut has some hard advice for them too: "Lower your expectations. Know that you will be offered a starting salary that will be too low to live on. Don't spend a lot of money on your car."

Mindel encourages recent grads to evaluate their major purchases prior to buying, carefully thinking about each purchase's potential return. "A car, for instance, is a waste asset," he says. "It doesn't go up in value. You buy it and it depreciates, so if you're going to buy, get something safe that's not going to eat your budget."

He also recommends investing in low-cost, high-return items such as basic health insurance and avoiding high-cost, low-return purchases such as flashy cars or luxury entertainment items.

Find Your Financial Teammates

Grads can, but don't necessarily have to, attack the world of money management alone, says Charney. A personal financial adviser can help you create a manageable investment strategy that will keep your debt in check.

"A financial adviser can help you maximize your 401(k), help you set up your IRA, set up investment accounts for emergency spending, and understand the vehicles that can help you get ahead," Charney says. He notes that investors between the ages of 20 and 30 can benefit because typically those are the years when investors have the fewest fiscal responsibilities, the most disposable income and the most time on their side when it comes to long-term investments.

The drawback to having a personal financial planner is that they cost money, usually a flat fee of $75 to $200 per hour or 1 percent to 3 percent of the value of your invested assets. For those who prefer to attack the money management beast on their own, personal finance software such as Quicken or Microsoft Money can help recent grads create a monthly budget. Also, using an automatic online bill-pay system can ensure that all major expenses get paid before you have time to blow it on a night on the town.

Freelance writer Christina Crouch is based in Richmond, Va.

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