The Next Step

Patrick is headed to college, and won't have student loans. What's the next thing he should save for?

QUESTION: Patrick is about to go to college. He’s been working since he was 16 and won’t have student loans to deal with. What is the next step since school is paid for?

ANSWER: Avoid the free T-shirt credit card tables. The only financial goal you’d have on campus is to see how much cash you can save. If you come up with over $20,000, you can start looking at investing in good growth-stock mutual funds. A lot of transition happens in the first couple of years after college, so if you have some money set aside to accommodate for that, that’s great. You can put it into an emergency fund until you hit $20,000, then maybe start a Roth IRA after that. Your big goal is to get out of school debt free.