Just a few short weeks ago, college graduates left the hallowed halls of academic institutions to face the real world, with its unbelievably low unemployment rate and fast job market. While there were undoubtedly those students who graduated with a job already in hand, the average graduate can expect to land their first real job anywhere from three to six months after they begin looking. Given the job search
process just 10 years ago, that sounds like a breeze.
But, this year’s graduating class is in for a big reality check. While finding a job may be a breeze, it’s finding an opportunity that lines up with their salary expectations that could be their downfall.
, a real estate agent and buyer matching service, released findings from a survey that estimated that graduates are overestimating their starting salaries $14,585. That can have a significant impact on their planning as they decide whether to rent or live at home with Mom and Dad, buy a new car and prepare to make loan payments once the six-month grace period expires.
Other key findings from the survey by Clever
• Graduates estimate that their annual salary one year out of college is $57,964, when in actuality the national average is $47,000. Clever notes that this holds true across most majors.
• Undergraduates overestimate the amount of money they think they’ll be making 10 years out of college by $15,000.
• Women are still making less than men by $4,338 early on in their career and then by $10,836 by mid-career.
Students can better prepare for post-grad life by setting realistic expectations, which can be established as early as senior year of high school. As students prepare for college, it’s beneficial to research majors and careers that are of interest. With that, college-bound high school seniors should pay special attention to starting salaries and trends over the length of potential careers.
Students can then use a budgeting calculator to determine cost of living after graduation. In addition to rent, utilities and insurance, students can build student loan payments into their budget – which is perhaps the most important post-graduate expenditure they should plan for during their senior year of high school.
Because that will determine how much a student can realistically borrow in order to pay for college. As a rule of thumb, students should never borrow more than their expected annual starting salary. If they estimate that they’ll make roughly $47,000 per year, the student loans
borrowed should not exceed that amount. However, if like undergraduates today, those planning to attend college vastly overestimate their starting salary, they could overborrow for college – which is obviously not good.
Doing the research ahead of time, staying educated on salary trends and setting realistic expectations will help to ensure that college graduates begin their careers – and their life in the real world – in a way that financially benefits them.