Anna Sowa / The Bulletin

Graduating from college or getting that first full-time job are often the first steps on the path to becoming an independent adult. But a degree and a paycheck don’t guarantee a solid financial future, and personal financial consultants say many people are clueless about how to avoid the pitfalls that can lead to economic disaster later in life.

That’s why financial counselors are trying to catch consumers early, as an insurance policy against unmanageable debt, defaulting on loans or bankruptcy.

“The earlier we begin (learning how to budget and save), the more likely we are to establish good habits,” said Bob Mullins, certified money management volunteer with Consumer Credit Counseling Services of Mid-Oregon. “It also gives compounding interest the opportunity to work on our savings for a longer period of time.”

For recent college graduates, financial education is usually not part of a degree, Mullins says. Quite the contrary.

“People are bombarded by advertising that teaches them how to consume more, or how to buy using credit,” he said. “But rarely are they taught the potential consequences of those actions, or the benefits of a spending plan, saving early and often, or about using credit wisely.”

Mullins’ rules

Mullins still remembers the daunting task of filling out all the paperwork at his first job, roughly 30 years ago. He had to determine how many exemptions to take on his W-4 form, so he wouldn’t have too much withheld for taxes, or, worse, not enough. Now, employees can visit for help filling out a new W-4 form.

Then, he had to make decisions about life, health and disability insurance, both short-term and long-term.

“What 23-year-old has the experience or foresight to make decisions of that nature?” Mullins says. “I didn’t, but I still had to make those choices.”

Mullins’ boss told him that the most important decision would be how much money to save, not whether or not to save. He told Mullins to start saving a portion of every paycheck, and have it deducted electronically to an account that isn’t easy to withdraw from.

The basics

Over the years, Mullins has built on that advice, and now offers an easy list for consumers to get themselves on the right track:

1. Pay yourself first — Have a portion of your paycheck diverted to a savings account. Mullins chose to have that money transferred to a plan that would buy savings bonds, because they were more difficult to raid than the account he’d had since age 12. The important thing isn’t how much you save at first, he says, but that you increase savings over time.

2. Build on your savings — Increase the amount of savings by every net increase in pay you receive. So if your raise gets you $100 more per paycheck, divert an extra $50 to savings. This will set the groundwork for building a nice nest egg.

3. Choose the best credit card — The best card is not necessarily the card with all the bells and whistles, but instead one with no annual fee and long grace period. A grace period is the time between the end of the billing cycle and the date that your payment is due. Look for a grace period of at least 25 days, Mullins says, and any additional perks, such as cash-back bonuses or airline miles, are just bonuses. You will actually find that a low-interest rate isn’t important as long as you follow the three rules for using a credit card wisely (see next tip).

4. How to use a credit card — A credit card is not meant to support purchases that you can’t afford. Never use a credit card to charge anything for which you have not previously budgeted. Always pay the balance in full before the due date. Finally, if you break any of the first two rules, cut the card to pieces because you aren’t ready for the responsibilities of handling a credit card.

5. Create a budget — This is no more than a self-imposed spending plan. Calculate how much money you have per month. Then, add up the total cost of your expenses: rent, student loans, car loan, gasoline, insurance, cell phone, Internet, cable and other utilities. You’ll need to set aside money to cover all those bills, as well as the amount for health insurance, disability insurance and savings.

The remainder of the paycheck, then, is for food, clothing, gifts, entertainment or vacations.

Life University

Central Oregon Community College financial aid adviser Breana Sylwester regularly counsels students on budgeting and other financial planning. She said students should have started learning how to live on a budget in high school, with the help of their parents.

But most don’t think about it until the students loans start coming in.

“It adds up over the years,” she said. “Having a degree doesn’t guarantee that a student will get a job.”

Especially in today’s economic climate.

“We’re trying to catch them early,” Sylwester said. “Once they are leaving college, it’s almost too late.”

Most student loans start being billed six months after the student graduates, or when the class load slips under six credits, Sylwester says. The loans are typically on a 10-year payback plan, she said, but students have options if they can’t do that.

If a graduate is having trouble paying back a loan due to special circumstances that include financial hardship, they can work with their lender to get a deferment or postpone their payment, Sylwester said.

Defaulting, or not paying, on a loan is never an option.

Those with loans can visit for more information. That site tracks federal student loans.

Sylwester hopes that in the next academic year, her online financial resources site will be up and running, with easy-to-use guides to budgeting and other tools.

In the meantime, she has some other financial tips for students to take as soon as they are enrolled:

• Contact a financial aid adviser to get help making a budget and to establish a relationship with someone who can help you.

• Check out the college’s online resources and free workshops by visiting or calling 541-383-7260.

• Print or pick up a brochure at the financial aid office about budgeting tools and choices. This will help you see where your money goes.

One common mistake she sees is students misusing their loans: accepting the maximum amount of loan money and attending only part-time, spending their loan money too quickly or taking four years to complete a two-year degree.

“They need to be serious about their education,” she said. “They need to work for that loan.”

That means managing the money: Figure out all the expenses the loan will cover — rent, utilities, books — and transfer that amount to a savings account so you won’t spend it. Then, transfer the money out as you need it to pay bills.

To help students figure all this out, the college offers occasional workshops that are free and generally part of another event on campus.

“You need to seek out this information,” she said. “Start asking questions, don’t avoid it, no one is here to scold you — we’re here to help.”

Financial tips for —

Central Oregon Community College financial aid adviser Breana Sylwester regularly counsels students on budgeting and other financial planning.

— students

• Getting that student loan: Contact a financial aid adviser, like Sylwester, to get help in creating a budget.

Check out COCC’s online resources and free workshops by visiting or calling 541-383-7260.

— graduates

• Paying back that student loan: Most loans start being billed six months after graduation, or when the class load is less than six credits. If a graduate is having trouble paying it back, some lenders can work out a deferment.

To track your student loan, visit