Real world full of financial lessons for recent graduates

Ricardo Lopez is apprehensive about walking across the stage Saturday to get his industrial engineering degree.\nThe University of Texas at Arlington senior knows what's on the other side: the real world -- financial statements, health insurance, mortgages, taxes.\n"I haven't ignored those things; I just haven't paid a lot of attention to them," says Lopez, 23. "I am going to have to learn a lot and learn it fast."\nAs new graduates step off campuses this month, many are finding themselves without the basic financial know-how needed to make a fresh start.\nMany will have student loans and credit card debt. Some will spend their paychecks frivolously. And most will laugh at the thought of creating a will.\n"They have to think about their past debts, live presently with a budget and plan a savings for their futures," says Paul Riskus, a certified financial planner with USAA in San Antonio.\nWith the past, present and future in mind, let's consider what a college graduate needs to do to ensure a secure and stable financial life.\nFirst, if you have student loans, consolidate them.\nAccording to the American Council on Education, 60 percent of undergraduates who attend a four-year public college accumulate an average of $15,375 in student loan debt.\nEven though you don't have to start making payments on student loans until six months after you graduate (later if you go on to get a postgraduate degree), when you pay them back is crucial.\nIt's best to consolidate your loans while you're still in the grace period because you can lock in the lower rate.\n"Consolidation makes things easier," Riskus says. "You only have to pay one lender at one low rate, instead of several lenders at several different, higher rates."\nAnd regarding that credit card debt: "Start paying it off," he says.\nNow that you have money coming in, you need to figure out where it's going.\n"Normally kids are making the most money they ever have right out of college," Riskus says. "Because they are not used to it yet, it's much easier to set up a spending plan and stick with it."\nLook at your assets and liabilities. Write down where you spend your salary, including housing costs, monthly bills and minimum debt payments. \nIf you can cut any costs -- i.e., get basic cable instead of a premium channel plan -- do.\n"It'll give you a quick snapshot letting you know if you are living beyond your means at age 22," says Todd Romer, business development director at Young Money magazine in Orlando, Fla. \n"Many 20-somethings cannot afford the lifestyle they are living. Set up a lifestyle you can afford."\nYou'll know you've accomplished that if you have money left over at the end of every month. If so, you have achieved peace of mind: You're spending less than you earn.\nThen, follow the 50/50 rule. Apply 50 percent of what's left over to your debts and 50 percent to a savings account.\n"It's a great way to start building an emergency fund," Riskus says. "It's always nice to know you have some extra cash."\nGraduating from college gives you freedom. And more freedom means more responsibilities -- and questions.\nHow much money should you save? Should you contribute to a 401(k) plan? And what about health and life insurance? \n"At whatever cost, make sure you have insurance," Riskus says. "Being young can make you feel invincible, but accidents do happen."\nIt is good to be prepared for the unexpected.\nComplete your company's benefits forms for health, dental and vision insurance as soon as you are eligible. Also purchase life insurance -- typically one to two times your salary -- and long-term disability insurance.\n"You need to protect your most valuable asset -- yourself," Riskus says.\nAside from unforeseen accidents, statistics show that Americans are living longer.\n"Rich or poor, smart or stupid, we all use and need money," says Robert T. Kiyosaki, co-author of the financial how-to book Rich Dad Poor Dad for Teens. "Learning to manage money is your life skill."\nIf you begin saving $100 each month at age 22 and assume it grows at a steady 8 percent, you'll have $351,428 by age 62. In comparison, if you wait until age 32 to start saving, you'll only have $150,029 at 62.\n"Yes, that's only 10 years, but it's a whole lot of money," Riskus says.\nTo make saving money easier, Riskus recommends investing 15 percent of your salary into a 401(k) plan, or at least the percentage your company will provide matching contributions. If you don't take the matching contribution, you're turning down free money.\nAnd if your employer doesn't offer a retirement plan, consider opening a Roth IRA or a mutual fund.\n"It doesn't matter how you do it, just save money," he says. "People need to understand how important financial independence is."\nIf you are going to succeed financially after college, you have to know the language of money.\n"In many ways your education begins once you leave school," Kiyosaki says. "You need to work to learn, not to earn."\nLopez, the soon-to-be UTA graduate, says he doesn't have to be rich, but he does want to be able to live a comfortable life.\n"I wish I would have learned more of this financial literacy stuff in school," he says.\nMost students do acknowledge that they are not ready for managing their own finances, says Tony Sidiropoulos, marketing director for the Independent Community Bankers of America, which represents small banks.\n"The educational system today is still not teaching them about money, how to manage it and make it work," Sidiropoulos says. "You are never too old to learn about money"