The following is a post from guest writer Greg Johnson.
Huzzah! Congratulations, graduate! You did it. After years of burning the midnight oil, you finally made it through college. Take a moment to give yourself a pat on the back and revel in your own sense of accomplishment.
This is an exciting time. You are moving from the friendly and comforting halls of academia to the real world of adulthood. No longer will you be thought of as “just a young college kid.”
No, no, no. You are a full-fledged adult, and you’ll be treated as such—by most of the population, anyway. You’re ready to take the world by storm, and here we are, waiting to be motivated by your energy and youthful optimism. Bring it on!
Okay—enough with the high fives and happy dances. The truth is, transitioning from college life into your new working routine can be difficult. Your arrival on the business scene may not be met with the enthusiasm you expect, but that could be the least of your worries. There is another, much more sinister animal lurking just around the corner—your student loan debt. ARRRRRGGGHH!
It’s easy to blow through the auditorium gates after graduation thinking nothing in your life needs to change. That’s certainly the attitude I took.
Looking back, I wish I had gotten my financial act together much earlier than I did. Instead of planning and saving, I wasted nearly a decade of my life—along with hundreds of thousands of dollars in potential savings—by treating my financial decisions without respect.
Now, 15 years later, I’ve had a wee bit of time to analyze the mistakes I made straight out of college. With the clarity gained through hindsight, here are a few money moves I hope you decide to make after graduation.
Get a Job, Any Job
First things first, right? You need to get a job—any job. Let me explain.
Most of us have lofty expectations when it comes to finding the perfect gig right out of college. I’m sure you’ve fantasized about a job that pays you a ton of money, is loaded with top-of-the-line benefits, and fulfills your purpose in life.
I hate to be the bearer of bad news, but that ain’t happenin’. There is no perfect job—especially when you are coming straight out of college. What you need is work experience, not a perfect job.
Many employers don’t care where you got your degree or what your major was. All they want to know is whether or not you can do the work. Since you don’t have any experience when you first graduate, you need to show them you are willing to work your tail off.
Don’t become paralyzed trying to find the perfect job, or even necessarily a job in your field. Just find something that pays. Slide your foot through the door of the mailroom, and work your way up from there.
Create Good Financial Habits
You are entering an entirely new phase of your life, which means it’s a great time to make some permanent changes that will set you up for good things to come! The earlier you develop good, productive habits, the better off you’ll be. Here are a few you should implement immediately:
- Start a budget. Budgeting doesn’t have to be difficult or scary, and it certainly doesn’t mean you can’t have fun. Simply plan for your spending by writing it in the budget. Make each dollar work for you. Control your money—don’t let it control you.
- Pay off your student loans, STAT! Being tied down to monthly payments makes it hard to get ahead. If it makes sense, refinance and consolidate your student loans ASAP. Then, throw any extra income you have at your debt and pay your student loans off quickly. The faster you get rid of this debt, the faster you can really start to build wealth.
- Invest early. Somewhere along the line, you’ve probably learned about the awesome power of compounding interest. But did you know that if you invest just $20 a week at 10% interest you’ll have almost $1 million by the time you turn 65? Pretty awesome stuff, right? Take advantage of your youth, and your company’s 401k plan, immediately!
Rent, Don’t Buy
Now that you’ve landed your first gig, you’re really cruising along. The next step is finding a place to live.
Since real estate is a long-term investment that can be extremely volatile over the short term, consider renting instead. Chances are pretty good that you aren’t going to stay in your first job for long. Not only will it be an entry-level position, but Forbes argues that employees who stay with a company for more than 2 years make 50% less throughout their career.
You are going to be looking to move up the job ladder, and there is no telling where you might end up. So, instead of tying yourself down to one spot, consider the more mobile-friendly option of renting.
Stay Away from New Debt
You landed a new job. You’ve got a place to live. And you’re starting to make money like you’ve never seen before. You feel like a gazillionaire. The banks will tell you that you can afford almost anything…buuuuuut, you really can’t.
The cool part about being an adult is that you get to make all kinds of awesome adult decisions. The bad part about it is, well, you have to make all kinds of adult decisions. I’ve been there—and I’ve failed miserably.
It can be so stinking tempting to buy a new car, go out every weekend with your friends, and put it all on credit cards to be paid at a later date. If you do, you certainly won’t be alone in your credit addiction. Unfortunately, debt is one of the main reasons Americans find it so difficult to save money. According to NerdWallet, the
If you do, you certainly won’t be alone in your credit addiction. Unfortunately, debt is one of the main reasons Americans find it so difficult to save money. According to NerdWallet, the average American household owes over $7,000 in credit card debt alone. That number doesn’t even include mortgage debt, car payments, or student loan debt!
What I want for you is financial independence. I want you to be able to afford to live life on your own terms, not be in debt up to your ears like the average American. Average sucks. Don’t be average, be weird…and say NO to new debt.
Making the right money moves after graduation can set you up for a lifetime of financial success and independence. Hard work, good decision making, and a little sacrifice today can pay huge dividends tomorrow. Take it from an old dude who wants to see you make better money decisions than he did at your age. Do your future self a favor and start making smart money moves today. At 35, you’ll be glad you did.
Take it from an old dude who wants to see you make better money decisions than he did at your age. Do your future self a favor and start making smart money moves today. At 35, you’ll be glad you did.
Greg Johnson is an online entrepreneur, social media expert, and freelance personal finance writer. Together with his wife Holly, he co-founded the popular personal finance website Club Thrifty. In his spare time, he loves to travel the world…on a budget, of course!
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