Con­grat­u­la­tions new grad­u­ates! Now just one more test: How will you man­age your fi­nances?

The Washington Post Sunday - - BUSINESS - BY JON­NELLE MARTE jon­nelle.marte@wash­

The in­spi­ra­tional speeches are over. The cel­e­bra­tions have passed. And now, it’s time for the col­lege grads who’ve landed jobs to start work­ing.

While their pay­checks will prob­a­bly be the big­gest they’ve seen so far, they prob­a­bly won’t feel big enough to cover the rent, stu­dent loan pay­ments and credit card debt they may have amassed as broke col­lege stu­dents.

There are ways to stretch those mea­ger earn­ings, though, es­pe­cially for the mil­len­ni­als who are good at in­vest­ing their most plen­ti­ful as­set: time. Part of that means es­tab­lish­ing cer­tain habits — like speak­ing up for your­self, sav­ing even when it feels im­pos­si­ble and tack­ling debt head-on — that will pay off more and more as those pay­checks grow. Here’s where to get started.

Al­ways ne­go­ti­ate: Ask­ing for more money is never easy, es­pe­cially when it’s your first job of­fer and you hardly have any ex­pe­ri­ence to tout. Most em­ploy­ers, how­ever, say they don’t pun­ish can­di­dates who ne­go­ti­ated salary on en­try-level po­si­tions. In fact, in a sur­vey of 700 com­pa­nies by Nerd Wal­let, three-fourths said they ac­tu­ally left room to grow those salaries by be­tween 5 and 10 per­cent dur­ing ne­go­ti­a­tions.

Use Web sites like and Glass­ to re­search what the av­er­age com­pany in your field pays em­ploy­ees in your re­gion with en­try-level ex­pe­ri­ence. Then ask for a salary closer to that — but only af­ter you have the of­fer in your hands. When you ask for more money, base your ar­gu­ment on how much the com­pany will ben­e­fit from hir­ing you, not on your fi­nan­cial strug­gles. And if they say no to a big­ger pay­check, see if they’ll give you a few more va­ca­tion days or the chance to work from home once in a while.

Have a bud­get: Once you have a pay­check, you need a bud­get to make sure you’re not spend­ing more than you earn. A rough guide­line is to spend about 50 per­cent of your pay­check on fixed monthly bills like rent, elec­tric­ity and In­ter­net ac­cess, says Bruce McClary, a spokesman for the Na­tional Foun­da­tion for Credit Coun­sel­ing. About 30 per­cent of pay can then go to more flex­i­ble spend­ing like din­ners out, hob­bies and en­ter­tain­ment. And 20 per­cent can go to­ward fi­nan­cial goals like pay­ing down debt and sav­ing.

The ex­act fig­ures are likely to change a bit month to month. For ex­am­ple, some peo­ple might choose to cut down on their en­ter­tain­ment spend­ing at times to

make big­ger debt pay­ments or save more money. The key, though, is to write down the tar­get per­cent­age break­down at least once to know what the num­bers look like.

Tackle your debt: Af­ter fig­ur­ing out how much money you can put to­ward debt pay­ments each month, come up with a de­tailed plan for what you’ll pay on each credit card or stu­dent loan. The way to save the most money is to pay the min­i­mum on each credit card and loan youhave, then make ex­tra pay­ments on the loan with the high­est in­ter­est rate, McClary says. Once that bal­ance is paid, re­di­rect that same monthly amount to­ward the debt with the next high­est rate, and so on.

If your pay­check isn’t big enough to make a de­cent dent in your debt, think about us­ing your free time to take on a side job, says David We­liver, found­ing edi­tor of the bud­get­ing blog Money Un­der 30. We­liver was in his late 20s when he started work­ing at Star­bucks and writ­ing free­lance ar­ti­cles to aug­ment his main salary. That al­lowed him to make ex­tra

pay­ments on more than $80,000 in debt, in­clud­ing credit cards, stu­dent debt and a car loan. He kept his living ex­penses low by shar­ing an apart­ment with three other room­mates. And in just three years of mak­ing those ex­tra pay­ments, he was able to clear all his debt.

Know your op­tions for stu­dent loans: Start by fig­ur­ing out the to­tal you owe in pri­vate and fed­eral loans. If you can’t make all the pay­ments each month, in­quire first about al­ter­na­tives for pay­ing back the fed­eral ones. Fed­eral loans tend to be more flex­i­ble on that front. For ex­am­ple, those strug­gling to keep up with the stan­dard pay­ments may be able to make smaller pay­ments based on their in­come. In ad­di­tion, some peo­ple work­ing in the public sec­tor can ap­ply for loan for­give­ness af­ter 10 years of mak­ing pay­ments.

If you can’t af­ford the pay­ments on the pri­vate loans ei­ther, ask for help. Even pri­vate lenders are start­ing to of­fer breaks to bor­row­ers who are strug­gling. What’s most im­por­tant is that you don’t

ig­nore the bills al­to­gether, since de­fault­ing on the debt can elim­i­nate some of th­ese op­tions.

Start sav­ing im­me­di­ately: It may feel eas­ier to wait un­til you’re mak­ing more money to start sav­ing for some­thing as far away as re­tire­ment, but if you don’t start now you’ll have to save twice as much later on just to catch up. For in­stance, a 25-year-old-who-makes $40,000 and saves a lit­tle more than 6 per­cent of his pay each year un­til he is 65 would have a 75 per­cent chance of hav­ing enough sav­ings in re­tire­ment, ac­cord­ing to the Em­ployee Ben­e­fit Re­search In­sti­tute. If that man waits un­til he is 40 and mak­ing $72,000 to start sav­ing, he would need to put away 14.5 per­cent of his pay to have the same chances of suc­cess.

If your com­pany will match your re­tire­ment sav­ings, con­trib­ute at least enough of your pay to re­ceive the full match. If you can’t af­ford to put away that much yet, start small and signup for auto-es­ca­la­tion, which in­creases your con­tri­bu­tion rate by one or two per­cent­age points each year.

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