Graduating from college is one of life’s most thrilling events. Finishing my degree, walking the aisle and receiving a fancy document in a leather-bound case remains one of the high points of my life.
Unfortunately, I still had a lot to learn about managing finances. I knew nothing, and worse, wasn’t aware that I knew nothing. What was there to know, anyway?
Sadly, I am not alone. Today’s graduates are smart but generally financially ignorant.
For college graduates gearing up to enter the real world, I offer the following for starting off on the right financial foot.
Dear Graduating Class of 2019: The decisions and choices you make in the first six months after graduation have the power to set the course of your life, for good or bad.
Of course, you’ve been a poor starving student long enough. You deserve a new car. And certainly, you need a better apartment. And some decent clothes.
Oh, and who could possibly deny you a European vacation to celebrate this amazing achievement, followed by a couple of weeks’ vacation to rest and relax? You’ve been through so much.
You reason that things are looking good in the employment department; you’re only young once; it makes sense to do this now before you’re tied down with a job, a home and kids. I could go on, but I’ll stop. And you should, too. Stop thinking like that!
Instead of launching you into the real world, taking on debt will send you into a downward spiral that collides with unpaid student debt, negatively impacting your life for many years to come.
Stop; drop; and roll. You learned it in elementary school for fire drills. Now apply it to your financial life. If anyone offers you a contract to sign — for a car, an apartment, a credit card or some other legal obligation — stop; drop the pen; and then roll out of there fast!
Keep driving your clunker. Yes, it’s embarrassing. That car you had to drive while in college is a pile of junk. It’s just not you! And those are exactly the kind of thoughts you need to get rid of.
First, you are not what you drive. Your car is simply a method by which to get from here to there. Keep it. Love it. Be grateful.
Move home. Whatever it takes, do not create any new debt during these critical six months. If that means moving back with family for a while — and if they’ll have you — do it.
Take a job, any job. You need cash flow, so take the first job you can get. Then keep looking. Keep your resume out there, and follow up as if your life depends on it. Perhaps you’ve heard the term “steppingstone”? There is nothing wrong with this. Keep your eye on the goal of your dream job, and get to work reaching it. In no time you’ll stop whining and feeling sorry for yourself.
Make payments. You need to immediately begin paying back your student loans, whether a little or a lot. Do not luxuriate in the six-month grace period. That is not some kind of gift.
Interest is accruing every day (unless you have subsidized loans, which almost no one has these days). Your debt is growing because the interest you owe but are not paying is being added to your principal balance.
Autosave. Even though in debt, you need to save money. You cannot continue to live on credit. I am a big fan of any kind of auto pay or auto save.
When you set this up, you eliminate the need to make a decision every payday. “Should I save money this week or go to a movie?” “Should I save this week or get those really cute shoes that are finally on sale?!”
But if you are autosaving, even $25 a week, you’ve eliminated that irritating decision of whether to save or not. You’re on autopilot, and that’s a nice way to roll.
And in closing ...
Finally, please accept my heartfelt congratulations on a job well done. You made it — not to the finish line but to the starting gate!