Financial advice for graduates

If you – or one of your kids – are about to graduate from college or high school, congratulations on successfully navigating the twists and turns of the education system. You don't need me to tell you what a challenging, rewarding and expensive road it has been.

But, as someone who's learned a few financial lessons the hard way, I would like to share a few steps you can take now to ensure you'll start the next chapter of life on sound economic footing.

First, live within your means. Unless you sailed through college on a full scholarship, you're probably already saddled with thousands of dollars in student loan debt. (If you're about to enter college, avoiding future loan debt is something to keep in mind.)

Add in rent, car payments, credit card and personal loan balances and other monthly bills – not to mention payroll taxes – and your new salary may not go as far as you'd hoped.

If you don't already have a budget, start one now. Many free budgeting tools are available online at sites such as MyMoney.gov (www.mymoney.gov), the National Foundation for Credit Counseling (www.nfcc.org), and Practical Money Skills for Life (www.practicalmoneyskills.com/budgeting), a free personal financial management program run by Visa Inc.

Speaking of student loans, here are a few repayment tips:

• Most federal loans offer grace periods before repayment must begin, but many private loans do not. Carefully review your loan documents to see where you stand.
• Ask if your lender will reduce the interest rate if you agree to automatic monthly payments or after you've made a certain number of on-time payments.
• If you anticipate repayment difficulties, contact your lender immediately to try and work out an agreement to defer payments, extend the loan's term or refinance at a lower rate.
• Many people with federal loans who are low-income, unemployed or working at low-paying, "public service" jobs in education, government or non-profits qualify for income-based repayment, where monthly payments are capped relative to adjusted gross income, family size and state of residence. To learn more, visit www.studentaid.ed.gov/ibr.

Many people don't realize the impact their credit score has on their financial future until after it's been seriously damaged from making late payments, bouncing checks, opening too many accounts or exceeding credit limits. This can haunt you later when you try to borrow money for a house or car, rent an apartment or apply for a job.

Find out where you stand by ordering credit reports from each major credit bureau – Equifax, Experian and TransUnion. You can order one free credit report per year from each bureau from www.annualcreditreport.com; otherwise you'll pay a small fee.

To learn more about the importance of understanding and improving your credit score, visit What's My Score (www.whatsmyscore.org), a financial literacy program for young adults run by Visa Inc. It features a free, downloadable workbook called Money 101: A Crash Course in Better Money Management, a free tool to estimate your FICO credit score and "Welcome to the Real World" money guides on topics such as student loan repayment, finding a job and budgeting.

You've worked hard to earn your degree; now put it to work for you. Just make sure you don't sabotage your efforts by starting out on the wrong financial footing.