Smart Moves for College Graduates- Part I

As I reflect back on my college years I mainly remember how much fun it was and then once I entered the ‘real world’ feeling a bit shocked at the reality of it all.  There is definitely a feeling of leaving one world and entering another completely different one.  I also remember receiving very little coaching about how the new world game was played.  That led to a lot of mistakes…or what I now call “learning opportunities”.  In this two-part series, I’ll share with you twelve of the lessons I wish someone had shared with me back then.

  1. Be flexible in finding a job. I recently read an article attributed to the White House stating that real unemployment is zero percent.  Don’t you believe it!  The job market, particularly for college graduates, is particularly tight.  In this market, you may find that you have to settle for a less than ideal job.  Your goal is to build work experience as you continue to pursue your dream job.  Whatever the job is, treat it as if it’s the best job in the world and your goal should be to master the position.  Learn the habit of always giving your very best.  People (employers) will notice.
  2. Get more education. The alternative to getting a job now in a challenging job market is to get more education.  When I graduated from college I was very ready to be finished with school but in today’s environment an MBA or other advanced degree can be very valuable and buy you some additional time for the job market to continue to improve.
  3. Begin saving from your very first paycheck. This habit, more than anything else, will make you wealthy over time.  It is the single most important key for most people who become financially independent.  Start with a minimum of 20% of your paycheck…more if you can swing it.  Ten percent will be for long-term investing and, in a separate account, the other ten percent will be for future big ticket items such as down payment on a home.  Set this up so that the money is either automatically taken from your paycheck or transferred from your bank account to an investment account.  Don’t ponder this one…just do it!
  4. Learn about personal finance and investing. If you were to commit fifteen minutes per day to studying personal finance and investing, you’d be a genius in a year!  Seriously, this stuff turns out to not be that difficult to master.  Mostly, it’s simply paying attention to your money and investing on a consistent basis.
  5. Buy a home. Since the housing bust in 2008, home prices have rebounded but it’s still a great time to buy a home and home ownership is a great way to build wealth over time.  More good news is that interest rates on mortgages are still very attractive but realize that rates are likely to rise over the next few years so your best move is to buy as soon as you can.
  6. Avoid bad debt. If you could learn this lesson now, it will save you much misery in the future.  The definition of bad debt is any debt that is used for purchasing something that is declining in value.  For example if you use a retail store credit card to buy a closet full of clothes and then face months’ worth of payments…that’s bad debt.  Using a credit card to finance a big night on the town when you know you can’t pay the credit card bill in full when it rolls around…that’s bad debt.  Buying furniture and appliances on credit is bad debt.

Next week, I’ll continue this discussion beginning with the best strategy for dealing with the ‘bad debt’ associated with buying a car.