6 Steps to Move From College Debt to Financial Success

Building Black Wealth: Following these principles will help college grads build a firm fiscal foundation.

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4. Aim for the 50-30-20 rule when it comes to budgeting. Wealth is a decision. It is a lifetime sum of day-to-day financial decisions, which begins and ends with tracking your spending and knowing the difference between needs and wants. If you need a budget starter tip, try the 50-30-20 rule. Use 50 percent of your income for your needs, 30 percent for your wants, and 20 percent for your savings and investing. If you want to jump-start your journey to wealth, flip those last two percentages: Save and invest 30 percent of your income and use 20 percent of your income for your fun, wants and desires.

5. Use your youth to your advantage. While making universal mistakes, trips and falls in the way of career and love are all a part of growing into your adulthood, your 20s do not have to be your “throwaway” decade when it comes to building a legacy of wealth. Speak to your human resources representative about enrolling in your company’s 401(k) program, tax-deferred annuity program or the like so that you are on solid footing for retirement. Speak to a financial adviser about your investment options so as to educate yourself on ways to generate passive income. With compound interest and youth on your side, you will be confident that your quality of life will not suffer once it is time to leave the workforce.

6. Monitor and manage your credit score: There will definitely come a time when you will need to make a big purchase (e.g., buy a home, start a business). In many instances, you will need to leverage your credit score to complete the purchase. You will want to secure a loan with the most desirable interest rates. Since the Fair Isaac Corp., or FICO, score is arguably the best-known credit score, it is crucial to know what constitutes poor, good and excellent credit scores through this lens. FICO scores above 720 generally receive the best rates. On the other hand, with FICO scores of 660 or lower, you run the risk of enduring hefty interest rates or, worse, not qualifying for loans at all.

For competitive credit scores, limit your credit card spending to only necessities, maintain low credit-to-debt ratios, pay your bills on time and refrain from opening up new credit cards unnecessarily. Also, order a free copy of your credit report and purchase your credit scores annually to monitor your growth, check for mistakes, and make long-term plans.

This is a superexciting time in your life. Life after college is full of unexpected changes, joy, pain, and leaps and bounds of growth. Make sure that as you pursue your passion, fight for love, find your voice, and stake out your claim, you are also tending to your finances—building personal, and possibly generational, wealth along the way.

Kara Stevens is the founder of the personal finance and lifestyle blog The Frugal Feminista, an online home for financial empowerment, girl power and juicy living. Connect with her on Twitter.