Helping Your Recent College Grad Become Self-Sufficient

You can help by gifting money for the deposit. Once they've built up their credit card, they can transition to a more traditional, unsecured credit card and get the deposit back.4

Help with a Car Purchase

In many cities, a car is more than a convenience; it's necessary to secure and maintain employment. If your graduate didn't require a vehicle during their college years, you might be contemplating purchasing one for them or assisting with a down payment.

Ensure the financial responsibility of owning a car, including insurance and maintenance, doesn't become a burden. Help them choose a vehicle that’s affordable (in terms of monthly payments, insurance and maintenance) on an entry-level salary. This helps ensure they can afford the ongoing expenses, promoting a sense of responsibility and independence.

Assist with Housing Costs

Helping a child with a down payment for a first home appeals to many parents who may have struggled to save up for a down payment on their first home. However, it's worth considering whether it's the right time for such a commitment. Your child might be better off getting a few years of career and personal growth under their belt before taking on the responsibilities of paying a mortgage, property taxes, utilities, insurance, repairs and maintenance.

Your graduate's first step toward independence might be renting an apartment. You can support this step with a security deposit or cosigning the lease. However, make sure they choose an affordable rental based on their current income.

If you decide to help them buy a home, ensure that the property, whether a modest condo or a starter home, is within their means, considering their income at this stage of life. This approach helps avoid financial strain and relieves the social pressure to "keep up" in a more affluent neighborhood.

Contribute to Retirement Savings

Educating your graduate about the importance of saving for retirement and offering financial support to kickstart their savings can have a long-lasting impact. Consider contributing to an Individual Retirement Account (IRA) and/or helping them maximize their 401(k) contributions, especially if their employer offers matching funds.

For 2024, individuals under age 50 can contribute up to $7,000 to an IRA and $23,000 to a 401(k).5

Helping your child start saving for retirement isn't just about giving them money — it's an opportunity to teach them about investing basics, such as determining their risk tolerance and understanding the benefits of compounding. This will set them on the path to long-term financial security.

Build a Professional Network

Becoming financially independent isn't just about making the right money moves. It's also about finding success in your career — and building a robust professional network is a cornerstone of that success. Networking isn’t just a strategy for finding new job opportunities; it's a powerful tool for personal and professional development, mentorship and learning.

Your graduate has likely already formed relationships with professors, classmates and alumni from their college. Teach them how to stay connected to this network through professional social media platforms, like LinkedIn, and expand their network by attending events, workshops and conferences related to their chosen career field.

Having a network is one thing; effectively utilizing it is another. Teach your graduate the importance of proactively seeking advice, requesting job references and exploring career opportunities through their network. Discuss the value of reciprocity in these relationships — offering help when they can and showing appreciation for assistance received. Networking should be viewed as a two-way street where value is both given and received.

By engaging in open discussions about budgeting, being mindful of the implications of financial gifts, and providing support in ways that promote responsibility and self-sufficiency, you can help your child build a solid foundation for their financial future. Remember, the goal is to empower them to make informed decisions and take control of their finances, ensuring a smooth transition into the next phase of their lives.