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The Column: Parents, grandparents can help grads put financial plan in place

Recent college graduates need to take control of their financial lives. If you are a parent, grandparent or close friend, you can help in this process by highlighting these financial goals.

Every grad needs to know how much she is making and spending to address all aspects of her financial life. Some expenses may be a shock, especially rent, utility bills and groceries now that the graduate is not living with three roommates. There are lots of apps to help with the process, including Mint and PocketGuard.

With cash flow in hand, it's time to address the three most important issues for any adult: reduction of consumer debt; establishment of emergency cash reserves (six to 12 months of living expenses); maximizing retirement contributions.

Create a list of each loan (credit card, auto, personal and student) and include lender details, like the interest rates associated with the loans, monthly payment amounts due and contact info.

Parents/grandparents/friends, you can discuss repayment strategies that will eradicate the outstanding debt as quickly as possible. Income will drive how much any graduate can allocate toward this goal, and as a result, how long it will take.

Grads should focus on the highest interest loans and then systematically work their way down to the lower interest ones. Whatever amount will be going to pay down debt should be automatically sent to the lender so that no penalties or late fees accumulate.

If there's no debt to manage, new grads can quickly aim to accumulate a financial safety net. Remind grads that this money cannot be put into risky investments — it should be liquid in case there is a need to access the funds, especially for any expenses that could arise within the next year.

If the new job includes a retirement plan, contribute to it, at least up to the match (if one exists) or to the extent cash flow allows. Parents can review the investment options within the plan and steer their grad toward lower-cost index funds, if available.

While there may be some resistance, help him understand the power of saving and investing for the future.

If a grad is living independently, she needs to review the lease. Keep in mind that many landlords hike the rent after the first year. Every time you move, it will cost money, so there may be an incentive to sign a longer lease that has a slightly higher rate in the first year.

If your grad will be boomeranging back home with you (about one-third of all 18- to 34-year-olds live with their parents), it's a good idea to create ground rules, which may include how long the arrangement will last and whether you will charge rent. I recommend putting these types of agreements in writing to make sure everyone is on the same page.

Grads should understand the different items that are detailed on their paychecks, including: federal and state income tax withholding; Social Security and Medicare taxes — also known as FICA taxes — health insurance premiums; and retirement contributions.

New grads, you will develop your own credit record, and is vitally important to pay bills on time and to guard your personal information. Review your credit report every 12 months at, and if there are errors, flag them.

Jill Schlesinger, CFP, is a CBS News business analyst. She welcomes comments and questions at

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