School’s finally out, summer is warming up, and there’s a new crop of high school and college grads out, ready to grab life by the horns. With this newfound independence also comes financial responsibilities, so without further ado, here’s a list of money management tips especially geared for new grads, inspired in part from a previously published roundup of advice from several other bloggers.
1. Learn From Failure (Both Yours and Others)
Because you’re a new grad, you already know everything, so you’re probably going to learn some of your lessons in the school of hard knocks. Yes, it’s okay to make mistakes. It’s even better to learn from someone else’s mistakes, but you will fail at times. If you fail, treat it as a learning experience rather than a chance to beat yourself up.
2. Consider Advice, But Make Your Own Decisions
You’ll get lots of advice and you’ll meet people who try to steer your future in various directions. Be humble, consider advice. But remember that this is your ship to sail, so you get to set the course. And if things don’t go according to plan, don’t be afraid to adjust the sails. Some of the advice you encounter will be helpful, some won’t apply. And some advice will only really speak to you after you’ve ignored it for a while. That’s all OK.
3. Your Decisions Now Have A Lasting Impact
The decisions you make now set the groundwork for your future. The loans you take, the jobs you work, the internships you accept, the beer money you spend. It all counts. As you move through life, try to balance two perspectives: the short-term and the long run. You can set yourself up for success now more than you even realize at this point. That’s probably overwhelming and scary, but it’s also a great reminder of how awesome you already are.
4. Find Your Passion
Money is very important, but it’s not the most important thing. Not by a long stretch. Find something in life that excites you. Make it your hobby or make it your career, just make it part of your life somehow. Passion and drive will take you far, perhaps much farther than simply chasing dollars ever could. But just because dollars aren’t everything doesn’t mean they don’t matter.
5. Invest In Yourself
Invest your time and energy into creating positive behaviors and skills.
6. Keep Money In Perspective
The journey never is about money. It’s about making the mental shift to become genuinely great at who you are, and then help people find themselves along the way. Money is just a tool to be used to create a life of freedom and happiness, not an end all be all.
7. Make A Budget
No matter what your lifestyle is, you need a budget to track and control your money. Even the “rich” do that and many people like me feel that wealth comes more from what you save than what you earn. If you aren’t aware of where your money goes and spend simply because you have money in hand, you will spend yourself into a financial mess. Spend less than you make and invest in opportunities that help you grow the money you save.
8. Be Prepared
Emergencies happen. Have cash available. Build an emergency fund.
9. Save First
Automate savings so they come directly out of your account before you have time to spend the money.
10. Save Now
Whether it be in an emergency fund and/or into retirement, start saving with your very first paycheck.
11. Grow Your Savings
Put your savings to work by investing. Re-invest your earnings and let compounding work for you. Compounding is a beautiful thing. If you understand compounding, you can build tremendous wealth.
12. Don’t Neglect Retirement
Retirement may seem like a long way away, but the earlier you start saving for it the better.
13. Understand Insurance
Like any other product, insurance costs money. Don’t just buy insurance because everyone else tells you it’s important. Understand what you an afford to self-insure and what you actually need covered.
14. Debt Is NOT Normal- Stay Away
Avoid debt at all costs. Debt is not kind. It isn’t your friend. Debt steals and punishes Learn to be patient, and wait until you’ve saved enough to “pay cash” for an item you desire. This is especially true if the item is a “want” instead of a “need”, but it applies to both.
15. Use a Credit Cards Carefully
You don’t need a credit card, but if you do get one, use it carefully. Only spend what you can afford, and pay off your balance in full every month. In doing so, you’ll avoid all interest charges. Also avoid cards with annual fees.
16. You Don’t Need a New Car, a Sports Car, or a Luxury Car
Cars are designed for transportation. Take care of them and they can last you a long time. You don’t need a new, shiny car to be happy, to have a good life. And you especially don’t need one to have a good wife- there’s a good chance your dream girl won’t know what a ‘beemer’ means. Don’t take out debt to buy a new car (see above)–especially if you already have a perfectly good car.
17. Don’t Rush Into a Home Purchase
18. Only Spend Money on Things That You Truly Value
If you can afford it (see budgeting above), it’s fine to spend money. But don’t spend based on peer pressure or habits.
19. Learn Contentment
There are lots of things that are screaming for your attention and money. Learn to be happy with what you have, and living within your means will become a lot easier.
20. Understand Lifestyle Inflation
As your income increases, you will be tempted to let your expenses increase. Instead, consider putting your raises into retirement or other savings.
21. Learn to Cook on Your Own
Eating out is expensive. Cook the majority of your meals and you’ll save hundreds each month.
22. Understand Both the Upfront and Ongoing Costs of Choices
You may think that you can afford to purchase an item, but also be aware of how that item will cost you in the future. This especially applies to services with ongoing bills.
23. Understand Your Employee Benefits
If you’re not sure whether or not you’re optimizing “the match”, schedule a meeting with your HR department to go through your details. Ditto for health insurance options. That’s why they’re there, so take advantage of their expertise.
24. Nothing Is Guaranteed
You can plan all you want, but nothing is guaranteed.
25. Don’t Believe in Getting Rich Quick
Multi Level Marketing scheme’s don’t work out for most people. While they aren’t necessarily illegal they can suck your time and possibly your money. The casino and lottery will do even more damage.
26. Learn the Rules Before You Break Them
Once you learn the rules, and understand why they are there, you may be able to deviate from them. But learn the rules first. Use them to form good habits and a good foundation. Don’t let a decade go by before you realize that you need to play catch-up.
Thanks to Picky Pincher, Penny, Mike Monfredi, Fritz, Amanda, Bill and Amanda, Tim, Steven, Erik, Kyle, and Gary for contributing their thoughts, which inspired this list. Do check out their blogs, as well as the original roundup.
Some links pay our bills. Our thoughts and opinions remain 100% objective. Find out more.
- While I do strive to only write accurate information and dispense valuable advice, I am not a licensed financial adviser. All information is based solely on my personal experience and personal research and should be treated as such. Find out more.