This month is Financial Education Month. It’s a time for people of all ages to learn new things about their finances that they can use to create a better future for themselves. Now is also an important time for young adults because in May, there will be a lot of new college grads entering the workforce and learning to manage their own finances. It’s a daunting task but it doesn’t have to be. There are so many resources out in the world that are meant to help young adults understand and manage their finances to make sure they are comfortable where they are at financially. One of these resources is Inceptia’s Great Advice for Grads 2022 free e-guide. It’s a tool that I have used a lot as I prepare to graduate from college in May. It covers a range of topics and each week I want to share my experience with the guide and how it is preparing me for graduation.

Student Loans

If I’m being completely honest, student loans are terrifying to even think about especially since they can be difficult to understand. They help you pay your way through college but unfortunately, they have to be paid back at some point. They don’t have to be difficult to understand though.

Great Advice for Grads 2022 provides a nice five-point checklist that gives you everything to consider way before you even make the first payment on your loans. The first and probably most important point is knowing who your servicer is. There are currently seven federal student loan servicers but since the pandemic started, some of them have decided they will no longer service student loans and there are a lot of loans getting moved around to new servicers which makes it even more difficult to know where your student loans even are. Luckily, the guide provides all the links you need to track down your loans and figure out what is going on with them. It also goes over options for repayment if the monthly payments are too high for you, how to make payments, it gives some things to consider before consolidating your loans, and even lays out some possible forgiveness options that you may qualify for.

Something else almost everyone will deal with at some point if they have student loans is student loan scam calls. These calls have seen a huge uptick since 2020 when federal student loan payments were put on pause due to the pandemic. This is something I hadn’t even considered happening to me until just last week when I got my first call offering me student loan “forgiveness”. Working for Inceptia, I have learned a lot about student loans but let me tell you that those scam calls can be very convincing. The caller was a real person and they sounded like they really wanted to talk to me about my student loans. They told me I may qualify for forgiveness on my loans. All I had to do was get on a special payment plan and they would forgive my loans.  Luckily, I knew not to believe that.

Great Advice for Grads 2022 has a great section devoted to student loan scams and how to avoid them. It provides expert advice on how to know it’s a scam and what to do if you have been scammed. Some of the key takeaways I got from it were: if it seems too good to be true, it probably is and, there is no one else that can help you qualify for student loan forgiveness other than your servicer. In the case of the call I got, they didn’t even say what company they were from and it all just seemed way too good to be true. I was able to apply my knowledge from Great Advice for Grads to know that it probably wasn’t real. Unfortunately, this is not the case for every student loan borrower. Student loan scams are very easy to fall for so it’s incredibly important to educate yourself on them and how to avoid them all together.

Great Advice for Grads 2022 makes student loans easier to understand and I strongly recommend that everyone checks it out whether you are a sophomore in college or are graduating in a month like me.

 

Saving and Budgeting

After graduation, I will be moving to a brand new city and while it isn’t too far from where I currently live, I am still nervous about paying for the move and all other costs that come with moving to a new city. Saving money and budgeting has become more important than ever for me but I didn’t know where to start. Luckily, Great Advice for Grads 2022 has some really useful tips and resources on how to save and budget that I would highly recommend using.

I’ve had a savings account for a while but as a college student, I didn’t use it a ton because of the limited income I was receiving. I did however know that I had financial goals that I wanted to reach and I needed to learn to save even a little to reach those goals. That is one of the points for saving in Great Advice for Grads. The tip that resonates with me the most is to set financial goals for something you are passionate about. Some people are passionate about buying a home so they start to set money aside to buy one. I am passionate about moving to a city that I have never lived in before, so I decided to start setting money aside to eventually move after college.

The guide also gives some advice and resources on finding a budgeting system that works best for you. This is a link in the guide that really helped me decide which budgeting system is right for me. It’s to a Nerdwallet article that gives some advice on budgeting but also suggests the popular 50/30/20 budgeting plan. This is a plan that I have known about for a while now thanks to Nerdwallet and it has helped me track my spending a lot better. How it works is for each paycheck you get, you set aside 50% of it for needs, 30% for discretionary spending and 20% for saving. This concept has really boosted how much I am saving each month and gives me a better idea of where my money should be going.

Something I had not considered until reading Great Advice for Grads was using my bank accounts to budget even further. I have one checking and one savings account but I have often thought about how it would be nice to have another bank account set up to better allocate my money based on the 50/30/20 rule. This is a suggestion in Great Advice for Grads. The idea would be to have an account for discretionary spending and one for necessities while also having your savings account for your saving goals. This is an idea I am definitely going to implement into my finances so I can better keep track of my money. The guide also suggests keeping your savings account with another bank so you aren’t as tempted to dip into it when your spending cash is running low. I know this is an issue that I have where I see the money sitting in my savings account and I am tempted to take even a little out to cover the cost of something I want. If I wasn’t seeing my checking account balance right next to my savings account balance, I think I would be a lot less tempted to dip into my savings for something that I think I can’t wait for.

The last point that the guide talks about in regards to saving and budgeting is being cautious on social media, especially TikTok, when seeking money advice. A lot of people on TikTok claim to give good advice on finances when in reality it should not be taken seriously. One myth that Great Advice for Grads tackles that surprised me that this was even advice someone was giving was that we should avoid 401(k)s and IRAs. I have always heard of the benefits of these accounts and haven’t really heard about them being a bad idea and yet there are people on TikTok claiming that these accounts are not worth it. This is not true however. It is important to save for retirement and starting as early as you can is best. It may seem boring to put money away and not use is until you are in your 60s but experts tell us that it is very important to do it now to save yourself pain down the line. It just goes to show that people who claim to be experts are not always right especially on TikTok.

I would highly recommend taking a look at the “Minding Your Money” section in Great Advice for Grads 2022. There is a ton of valuable information in there and it’s very important to get educated on how you can best prepare for the future and any unexpected expenses that may come up.

 

Career and Life

Maintaining a lifestyle you are comfortable with can be a difficult task when you are first going out on your own. I know for me, I am getting ready for the real world and I am making my budget and preparing myself financially, but I often feel like I neglect to consider how my lifestyle plays into my spending. I am trying to avoid what is called lifestyle creep. This is when you may be over spending on things to satisfy the life you live at the expense of saving money or purchasing more necessary things.

Great Advice for Grads talks about how lifestyle creep is an easy trap to fall into especially as we earn more money throughout our careers. While splurging here and there isn’t a bad thing, constant overspending could lead to problems down the line. It could make saving for big purchases difficult. It can even have an effect on saving for retirement. That’s why it is recommended to make a financial plan and budget and try to stick to it as much as possible. Doing so will let you see how much you can afford to spend on your lifestyle and help you make any changes that need to be made.

Another part of the guide that really stuck out to me is managing money while inflation is on the rise. We are living through some economically unstable times and it can seem hard to manage a budget when prices of things are always changing. It’s recommended to make big purchases now if you can afford them because waiting could just mean the price of it going up again very soon. Cutting back on discretionary spending is something else that can help save some money. Something else I am considering doing based on advice from the guide is opening up a higher yield savings account. This would mean getting a savings account with a high interest rate so I am earning more money just from saving. Overall, it’s important to keep an eye on prices as they rise so you know how much money you need to set aside for needs and discretionary spending.

The last point that really resonated with me was managing mixed income friendships. I have friends with many different income levels and that can make it difficult to spend time together sometimes. Sometimes my friends want to do something that they can easily afford but it’s a little more of a financial burden for me. In order to keep up with my friends’ spending habits, I may need to make sacrifices to enjoy good times with them. If there is a trip they want to go on, I might look for alternative meal options on the trip so I am not eating out as much on the trip. I would also likely create a spending plan to save for the trip and to ensure I am not neglecting my budget going on the trip. It’s little things that can go a long way. If I am the friend that has the higher income, I am a lot more understanding and empathetic and willing to look for an option that works for everyone’s budget so I can still enjoy time with my friends while also minding my money and theirs.

Credit

The last point I would like to talk about from Great Advice for Grads 2022 is credit. For a lot of college students, credit is a very new concept and one that we might not see as important. I didn’t even get my first credit card until very recently so it is still very new to me. I realized that I really needed to start building a credit history so I am able to apply for loans and other things down the line. However, it was something that terrified me at first because of how little I knew about it. Luckily, Great Advice for Grads 2022 has so really useful advice when dealing with credit.

The first thing I wanted to learn about was how I actually build my credit. I knew that in order to maintain a good standing with my credit card company, I needed to at least make my monthly payments on time but I hadn’t even thought about building my credit specifically. I was able to learn from the guide that in order to increase my credit score, I need to make payments that get me below at least 30% of my credit limit but it’s best to pay off as much as you can before the payments come due. In fact, Great Advice for Grads recommends paying the balance in full each month if possible. This is a tactic I have been employing with my new credit card and it has helped to increase my score.

I’ve also learned that even though I am trying to build credit, it is still okay to use my credit card when necessary. Emergencies come up where I may not be able to pay for something out of pocket and will need to use my credit card to cover the expense and pay it back over time. While that is not ideal, it is still something I have to plan for. Even when I graduate, there will be a period of time where I will be going without a paycheck and I need to make a plan to stay afloat financially. Part of that plan factors in using my credit card to cover some expenses while I am not getting any income. As long as I spend what I know I can pay back at a later time, I will be able to use my credit responsibly.

This article provides information for educational purposes. NerdWallet does not offer advisory or brokerage services, nor does it recommend specific investments, including stocks, securities or cryptocurrencies.

Inflation has been surging worldwide for months, and it’s impacting prices of nearly everything, from gas to Oreos. Wednesday, the Federal Reserve announced steps to take action.

“High inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transportation,” said Fed Chairman Jerome Powell in a prepared statement on Wednesday. “We are committed to our price stability goal. We will use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.”

The Fed this week signaled interest rate hikes next year and an end to current, near-zero interest rates. Forecasts released Wednesday show that Fed officials project as many as three 0.25 percentage point interest rate hikes in 2022.

The Fed on Wednesday also increased its 2021 forecast, projecting a 5.3% inflation rate this year, above its previous estimate of 4.2%. Additionally, it increased 2022 inflation projections to 2.6%, up from 2.2%.

Maybe you’re a saver planning for retirement. Maybe you’re a borrower — either with credit card debt or planning a major purchase, such as taking out a mortgage on a home. For savers and borrowers alike, the news is set to make major waves on your money. Here’s what you need to know.

Inflation simply means that the value of your money decreases over time. When your grandparents reminisce about when a soda cost a nickel, that’s a result of inflation.

While inflation is happening all over the world, it has hit the U.S. particularly hard, according to the Pew Research Center, which looked at inflation across 46 countries. Inflation during the third quarter of 2021 was higher than it was during the same period in 2019 in 39 of the 46 countries.

What’s more, the U.S. saw a 3.58 percentage point increase in inflation, which was the third- highest increase of any country in Pew’s analysis, behind only Brazil and Turkey.

What surging inflation and interest rate hikes mean for savers

“Inflation has been further fueled by a tight labor market,” says Leah Hartman, a finance and economics lecturer at the University of New Haven’s Pompea College of Business. “We’ve had global supply chain shortages. Pricing is crazy, and it’s especially hurting low-income consumers.”

The recent inflation surge has worried some investors. Investor outlook is currently hovering just above where it was during the second quarter of 2020, which was its lowest point since the pandemic. That’s according to the Gallup Investor Optimism Index, a composite of investors’ ratings of various aspects of the economy, personal finances and investments. What’s more, investors haven’t been this pessimistic since 2014.

That survey found that investors’ current sentiment about inflation is now more negative than what their view of unemployment was at the start of the pandemic, when unemployment reached 14.8% in April 2020. That figure is the highest ever recorded by the Congressional Research Service since it began collecting data in 1948.

The good news is that investors are bullish on Wednesday’s news, as stocks closed higher that day after the Fed’s meeting, which is not always the case when the Fed suggests interest rate hikes.

“By taking a fairly aggressive stance, the Fed implicitly stated that the economy is strong enough to take this tightening,” says Giuseppe Moscarini, a professor of economics at Yale University. “The Fed forecast is one of a booming economy in 2022.”

A good rule of thumb for combating inflation is by investing, versus saving money in a traditional savings account. That’s thanks to the magic of compound interest. Your investment strategy could look like retirement planning with an IRA or 401(k), or building a well-diversified stock portfolio in a brokerage account.

And Hartman says, even in a rising-rate environment, that’s no reason to panic.

“As a consumer, don’t go out and stockpile because you’re afraid that gas or food prices might go up,” Hartman says. “That only pushes them higher.”

And even if something like housing, car or Oreo prices are rising, you might not necessarily even see price increases, depending on your lifestyle.

What surging inflation and interest rate hikes mean for borrowers

If you have credit card debt, expect to pay more in interest when the Fed raises interest rates. Typically, credit card interest rates rise and fall in line with the federal funds rate, so you’ll likely owe more in interest on that credit card debt when rate increases occur.

As far as other types of debt — such as mortgage debt — it depends. Sometimes Fed rate increases lead mortgage rates to rise, but sometimes they fall.

If you’re home shopping, it’s true that higher interest rates may reduce your buying power. That said, you don’t have to panic or rush to buy because of possibly rising interest rates. Other factors go into your home-purchasing decision, including existing home prices, your family’s needs and your employment situation.

“Check that inflation is really hitting the part of the basket you spend more of your budget on,” Moscarini says. “If house prices are going up fast, but rents are not rising as fast and you are a young renter not planning to buy any time soon, then inflation is not as big a deal.”

Meanwhile, Hartman says, work to reduce debt and increase savings.

“If you are in credit card debt, get that paid down,” says Hartman. “If that’s your student loan — and it might be — then go after that. Target the highest interest rate burden that you have, and diminish that debt as quickly as you can.”

Meanwhile, stay focused on your long-term investing strategy. With that, rising rates can be a good thing for your finances — even if inflation hasn’t been.

The article How the Government’s Response to Inflation Could Help Savers originally appeared on NerdWallet.