Every year around graduation time, I like to do a little tribute to the freshly-minted Bachelors degrees and this year, I thought I’d garner some help from my friends who are some of the most brilliant people out there. Warning- they had a LOT of thoughts.
We’ve all been where you are. The big, bad world can seem like a scary place when you’re thrust in to it, after having the best four years of your life so far. You got this.
FYI, I italicized what other people contributed and am writing in regular print :).
Educate yourself.
I can’t stress this enough. Being “financially fit” takes work, and being well-informed is a never-ending endeavor. The tides are always changing, so stay on top of it. I personally am a huge fan of podcasts and have heard that The College Investor is fantastic for recent grads. If you do just one thing for yourself this summer, give it a listen each and every time a new episode drops. You’ll be so glad you did.
I’ll also note that several of my friends have mentioned Dave Ramsey. I agree that his advice is wonderful for so many people, but he’s just one expert of many. If you’re strapped with debt, his advice might be good to take. If not, I really like what Suze Orman has to say too.
The last point on this one refers to Catholics, but I think it’s true for Americans in general. Money is an uncomfortable thing to talk about in our society and it doesn’t have to be. My dad always said that the moment you start to feel like “I’ve got this” is when you’ll start to fail. There is ALWAYS something you can learn and financial literacy is no exception.
Unless your parents are Wall Street brokers be careful how much of their advice you take. New tech and innovation are constantly changing the financial landscape. What was good advice 10 years ago may be terrible advise now. Do your own research and homework.
Watch Your Spending.
If I could go back to 23-year-old Brittany, I would WRING her neck in this arena. Did I love the outlet mall? Yes. Did I need to go there EVERY DAMN WEEKEND? No! When I was fresh out of college, making an abysmal teacher salary I decided my first year out was my time to shine. Let’s just say that that came crashing down really quickly. While I (fortunately) never racked up credit card debt, I could have been soooo much more responsible. It was not a good situation at all.
Live inexpensively: have roommates, take the bus, etc. But have fun: travel, stay up late, try new cocktails. Free time is the greatest gift you have in your 20s.
Don’t eat out and instead meal plan for a positive bank statement and a healthy body!
Spend time really looking at your credit card and bank statements each month. Sometimes you don’t realize how much money you are spending on frivolous items… Starbucks… Target…. more Target.
Credit cards are important for building credit but open one with a VERY low limit. It’s easy for things to get out of control and easy to pay off a small amount. And no you don’t need four credit cards (I know so many people who have multiple)
Don’t waste money on nails, tans, waxing, hair, etc. You are the youngest and most beautiful you will ever be. Take that money and put it into a travel fund, then go and take pictures all over the world.
Tipping: it’s an art. Learn how to do it correctly.
Me again. I wanted to chime in about my fabulous friend’s mention of tipping. I wrote a whole blog post about this a while back, but want to stress this fact: IF YOU CANNOT AFFORD TO TIP WELL, DON’T GO OUT TO EAT. End rant.
Pay off debt. Right now.
I’ve always been debt-adverse, so I don’t have a ton to say about this, but my friends sure do!
Prioritize paying off your school loans. Make a plan–and stick to it–to dig yourself out in five to seven years.
Pay down your principal on any student loans so you can screw less interest.
My biggest advice to them would be to NOT defer student loans if you have them. And if you don’t have loans, good for you, but then you should make sure you understand your payroll info when you first start. You don’t want to not take enough out of your paycheck and then owe big time on taxes. If you have not taken out of each paycheck, you won’t really notice but you’ll either get money back or not have to pay as much.
Save, Save, Save
I couldn’t agree more with the first comment here. AUTOMATE YOUR SAVINGS. I waited too long to do this and as soon as I did, it’s like the money wasn’t even there to begin with. When you automate your savings, you don’t even miss it. Trust me.
I wish someone would have told me to transfer a small percentage of $ from my checking acct to my savings acct every Friday. Adjust the weekly amount transferred quarterly or biannually. Your savings will grow faster than you think- a great habit to take into the rest of your adult life!
Don’t procrastinate saving for retirement.
Yes yes yes to everything everyone says here. If I knew how oh-so important a Roth IRA is from DAY ONE of your career, I would have taken advantage of it. I’m in a good position for retirement now, but I wouldn’t have had to do so much catch-up if I had started earlier.
Take advantage of every retirement option your workplace provides. Never leave matching funds on the table.
Stay in the same job for a while so you can continue to make money and retirement 🙂
Open an IRA immediately (if you don’t already have one) and start saving for your retirement. Take advantage of any company offered 401k plans, matching, etc. Also, to choose a fairly high percentage of your paycheck (push yourself and make it higher than you think) and have it automatically deducted. You can make the good decision once and not over and over again (do I spend it, do I save it??) It’s ALL about saving regularly and that compound interest!
Currently in college and I definitely needed this advice for post grad! I need to learn more about Dave Ramsey.