My husband began his last undergraduate exams ever today. He graduates from the University of Virginia in a little over two weeks. As I approach this time with him from the other side of the ceremony, I find myself reflecting about how college graduates face a particular set of financial and life planning needs.
As they take their diploma many find they’ve also mysteriously taken the full status of adulthood. I know I did at my 2012 graduation.
I remember going to my parents and asking them, “Can you make a list of everything you do financially?”
“Are you serious?” they rebutted. I could see they were overwhelmed by even the thought of the task.
However, just the other day, I stumbled upon a Wall Street Journal article where they interviewed a number of “experts” in the field of finances to ask what “The Best Financial Advice for Young People Starting Out” is. I wish I had found such an article a year ago. Below, I’ve tried to summarize the best of their answers into clear bullet points and provide links to more in depth analysis of each idea.
- Know what healthy spending looks like: 35% long term savings / 65% lifestyle.
- Start saving now, especially for retirement.
- Don’t expect to live like mom and dad right out of the gate.
- Make good decisions about the big things like what you drive and where you live. Avoid setting your lifestyle too high and permanently burdening your future.
- Get human capital—namely, the education, training, skills and experience.
- Build an emergency savings cushion.
- Start contributing to your company 401(k) plan immediately, maximize your contributions if possible and always get your employer match.
- You should be focused on systematically paying off any student loans or credit cards.
- Check your credit now to look for inaccuracies and to see how far your current credit score is from the ideal score for lending, 740.
- Start setting money aside each month toward your future down payment.
As a recent college graduate, I would want to tack on the end:
- Save your money in investments, not just bank accounts. You can do it.
Open a brokerage account. Set an asset allocation. Rebalance in May.
- With great complexity comes great opportunity. Know when to seek the help of financial advisors, like tax preparers and fee-only financial planners.
- Open and use (at least) one credit card to get a credit history, but avoid bad credit.
- People in the third world live off mere dollars a day. Do not trick yourself: you could always save more.
- What seems too good to be true is. No return on investment is guaranteed.
- Ask politely and liberally for what you want. You do not have because you do not ask.
- Before age 30, find a spouse, a house, and a purpose.
- Post-college can be a lonely time, but don’t make it worse by being a hermit.
- There is a honeymoon period to every new endeavor.
You’ll be infatuated, then disappointed, and then satisfied. Don’t give up early.
- Every day, the work you do matters.
What advice do you want to give to college graduates?
Photo used under Flickr Creative Commons
brenda mayfield fish
Well done Megan, hope married life is treating you well. Brenda
For those of you who are interested in this topic, Meg Jay — a clinical psychologist, UVA alum and assistant professor — is hosting a webinar on the topic called “The Defining Decade: Why Your 20s Matter and How to Make the Most of Them Now“. The webinar, based on her new book by the same title, will be May 10, 2013 at 12:00 PM – 1:00 PM EDT. Upon registering, they will send you a link to participate.
Here’s an excerpt from her TED2013 interview:
This post was featured in the Festival of Frugality carnival hosted by Lance of Money Life and More.
This post was featured in the Life Planning Edition – Wealth Management Carnival #13