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As a college student, you probably don’t need to be told that life is expensive. If you’re like the average student, by the time you get your diploma, you’ll have racked up tens of thousands of dollars’ worth of debt for the privilege of getting a piece of paper that may or may not help you get a well-paying job with good benefits.

That job used to be the key to long-term financial success, as many employers offered a wealth of benefits that helped employees ensure their financial future. Unfortunately, due to stagnating wages and an increasingly competitive job market, many of today’s young adults are facing tougher economic prospects than their parents did.

So how can young adults prepare for the sometimes-harsh realities of life after college? One thing you can do right now to put yourself ahead of the game is to start learning about how to create a long-term financial plan. Taking your future into your own hands – rather than relying solely on employer 401(k) matches and rapidly disappearing pensions – is a great way to help secure your future finances, even if your first (or even second, third or fourth) job doesn’t offer long-term benefits.

What Do You Want to Plan For?

A lot of big, more expensive life goals – buying a home, throwing a big wedding, having a comfortable retirement – might seem pretty far off right now. But because these things come with such hefty price tags (the average wedding cost is $33,391), you’ll want to start saving for them as soon as possible.

Your number one priority should be saving for retirement. Because retirement is so far down the road, many young adults assume they don’t need to start saving right away because they have plenty of time. However, with the amount of money today’s young adults will likely need to afford retirement, starting right away can be the difference between retiring comfortably and struggling to make ends meet.

Think about any other short- and long-term goals that you’ll need to plan for, and when you’d like to reach them. This includes things like taking a yearly trip or becoming debt free.

How Much Is It Going to Cost?

Write down these goals and try to create a rough estimate of what they’re going to cost. You don’t necessarily have to rule anything out just yet, because you likely don’t know exactly what your budget will look like once you’re out of college. However, this can serve as a good reality check. For example, looking at the cost of your dream wedding combined with your dream honeymoon may prevent disappointment down the road when you realize that two big-ticket items back-to-back aren’t financially feasible for your budget.

If you’re looking at the cost of retirement, you may find it helpful to play around with a retirement calculator to get an idea of how much you’ll likely need and how different contributions will grow over time.

Once you know how much your big goals will cost and when you’d like to achieve them by, you’ll have an idea of how much of your budget needs to be allocated toward each specific goal.

Learn About Your Saving Options

Pretty much all your long-term financial planning is going to revolve around saving your money, and you’re going to need somewhere to put it all.

There are two main paths the money you allot for your long-term finances can take: Saving or investing. Both of these options serve different purposes, so do your research and keep your goals in mind when deciding where to put your money.


A savings account is a good bet for money that’s going toward any short- or mid-term goals you have, or money that you want to be able to easily access. There are three basic types of savings accounts.

  • Regular savings account: Your typical, no-frills savings account. You’ll put money that you need quick access to here, so this is a good home for your emergency fund, as you won’t incur withdrawal fees – as long as you don’t withdraw more than six times per month. The downside to this type of account is you won’t accrue much in the way of interest. Interest rates on these accounts can be as low as 0.01% annually (although some online banks offer higher rates).
  • Money market account: These usually require a minimum balance (usually between $100 – $2,500) but have higher interest rates than with a regular account, meaning your money will make you more money. Availability of funds is one of the main benefits of a money market account, as some accounts come with a checkbook and debit card, allowing you easier access to your funds.
  • Certificates of deposit (CDs): CDs typically have the highest interest rates of the different types of savings accounts. In return, you completely give up access to your funds for a set amount of time, anywhere from one month to several years. The longer the term, the higher your interest rate. These accounts are good for money you know you won’t need right away.


Your bigger, long-term financial goals, like retirement, will likely be more suited for investing rather than saving. When you put your money into an investment fund, your money grows and keeps up with inflation, making it much more useful than if it were sitting in a low-interest savings account. If you start early enough, your money has decades to compound and grow, and you can end up with a decent-sized nest egg when you’re ready to retire.

Investing doesn’t come without risk, which may turn off today’s young adults, many of whom tend to be fairly risk averse. However, your age puts you at an advantage. If you start investing right away, you’re more likely to absorb the inevitable ups and downs of the market over the long term.

Overall, you’ll want to have a good mix of savings and investments to have a well-rounded, stable financial portfolio.

Create a Plan for Your Debt

You may not know a lot about what your life will look like when you’re out of college, but if you’ve borrowed any loans to help pay for school, one thing is certain: You’re going to need to pay off that debt.

Paying off your loan debt is likely going to be one of the more important things on your list of goals, since the longer it takes to reach that goal, the more it’ll cost you.

Do you know how you’re going to make your monthly payments? Make sure you understand the consequences of missing loan payments and what your options are if you find yourself unable to pay.

Alternatively, you’ll also want to create a plan to keep yourself out of future debt. If you have any big costs on the horizon that are unavoidable, it’s good to figure out how you’re going to save for or pay for those things so you’re not scrambling and end up putting yourself into unnecessary debt.

Learn How to Budget While Saving

Saving money can be kind of boring. Instead of getting to enjoy the fruits of your labor by spending hard-earned cash on little rewards for yourself like video games, new clothes or dinners at nice restaurants, you have to do the responsible thing and put it away for your future self.

However, saving money for the benefit of your long-term financial plan doesn’t mean you have to forgo all of your creature comforts and never treat yourself to something nice in the moment. It just means you need to have a budget.

Obviously, the priority of a good, balanced budget will be paying for necessities, like food and shelter. After that, you’ll want to put money toward your long-term financial health. This includes contributing to your emergency savings account and retirement fund, as well as paying off any debts you have. In general, aim to put about 20% of your pay into this category.

Once you’ve taken care of these essentials, it’s up to you to decide what to do with the remainder of your cash. Take a look at your goals for guidance. If you’d like to take a big trip in six months, you’re probably going to want to save more aggressively than if you were saving to buy a car in five years, meaning you’ll have less to spend on everyday luxuries like daily iced coffee or getting your nails done, at least until you reach your goal.

Want to create a budget but not sure where to start? There are plenty of apps out there, like Mint, that do the hard work for you.

Have an Emergency Fund

Having a savings account with around six months of living expenses saved up in case of emergency will go a long way in helping your long-term financial security, because you’re less likely to have some unexpected cost completely derail your finances.

If you have a job, you can start  building this fund now. Open a regular, easily accessible savings account and specifically designate it as your emergency fund. Start contributing a little bit from each paycheck to the fund. Over time, it’ll add up and hopefully prevent you from having to drain your checking account or take on unexpected debt to pay for any of life’s misfortunes.

Thinking in the long term, especially when you’re still in college, can feel overwhelming. But knowing what lies ahead and becoming educated on how to set yourself up for success can make the process a little easier.

What are your best tips for long-term financial planning? Let us know in the comments!

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