Financial Advice 101 for Recent College Graduates

Photographer in grass smiling.

It’s flashy. It’s fancy. It’s validating.

It’s your college degree, and it’s finally in your hands. You’ve worked hard for this for a long time, and the fruit of your labor is symbolized in that piece of paper.

The problem? With the fading of college life comes the onset of full adulthood, with all of its annoying worries. One of those is how to handle finances.

Luckily, there are definite mistakes to avoid, and plenty of good advice to follow as you start to figure out what money handling looks like in this new phase of life. In fact, here are seven of them ready-made for you.

Dollar bills rolled up in dirt growing from the ground. 1) Put Finance in the “Essential for Adults” category

Perhaps the number one mistake for college grads to avoid when it comes to finance is not giving it the attention it deserves.

Young people understand, on some level, that emerging as adults means they have to learn about insurance, what does or does not break the law, how to find a job, and how to set themselves on a career path. Somehow, though, finance—which has deep implications for each of those areas—does not always get its due attention. Money-handling is often perceived as a “necessary evil” or something to simply keep on the radar, rather than a skill that is essential for functioning in everyday life.

If you realized that politics was an important area to be informed about, what would you do? Likely, you would read well-reviewed books and articles about it. You would reach out to your network of trusted peers and family members to gain a more well-rounded perspective on it.

Finance should be no different: if you come to discover its importance for your life, you should devote your attention to it, at least for a season. Read a couple of books, reach out to adults who are further down the path of financial success and maturity, and get yourself informed.

The great thing is that you don’t have to give it that much attention for the rest of your life: once you learn a base level of knowledge about how to handle your finances, you can carry those core principles with you indefinitely.

2) Don’t Hope—Budget

Another common and related mistake by college graduates is to only handle money peripherally.

In other words, you know vaguely that you shouldn’t spend more than you have and that you’ve got to make enough money to live off of, but you sort of cross your fingers and hope that it all works out OK.

Instead, you should know exactly how your money is coming in and going out. This reduces the amount of unwelcome surprises that can come your way and is a much better alternative to checking your bank account once every few months and crossing your fingers that you’re on the right side of zero.

In an article written by Kerry Hannon on Forbes.com, the author shares an enlightening part of her personal story:

“I’m not ashamed to tell you that it was scary and stomach-turning to get phone calls from credit card companies. To set things straight, I borrowed money from my older brother to erase my credit-card debt (I repaid him over time, without interest) and began using my cards only when I knew I could pay them in full each month.

After that experience, I vowed never to let anything like it happen again.”

3) Build an Emergency Fund

We’ve said it before, but your first priority should be to build a financial safety net for yourself.

No one plans on medical, auto, or other emergencies—that’s why they’re called emergencies. Set your mind at ease and save until you’ve got at least $1,000 set aside for such a case.

4) Treat Debt Like Death—At Least for a Little While

As you emerge from college, you are trying to stabilize your life. You’re beginning to figure out what your income and lifestyle will reasonably look like, since college life is not really all that indicative of post-college life.

In those early days, we recommend avoiding all new debt as far as humanly possible. Again, you need some buffer time to learn your income and spending rhythms, and the last thing you need is to saddle yourself with new debt that ends up pushing you past your spending limits when the dust clears.

5) Write Your Own Story

Your financial story belongs to you, and it shouldn’t look like someone else’s.

There is no “right way to do things,” so be very careful not to look around at friends and family and compare your financial success to theirs. Some of your peers will overspend on nice cars and vacations and you’ll feel like you’re missing the boat (maybe even literally). Others will simply have a more lucrative skillset than you (talking to you creative types out there) and will have more money left over for the time being.

But they’re not you, and you’re not them. Comparison rarely gives us an accurate picture of ourselves or our own success. Every person’s life circumstances are vastly different, from socio-economic status to education to family backgrounds, pressures, and resources.

Write your own story, money and all. And know this: it can be as long or as short as it needs to be.

6) Be Patient on Your Career Path

The reality is, you probably need a job out of the gate—and it may not be anything close to what you studied.

If you have the means to hold out for a job in your desired field, e.g., you’re living with parents rent-free and aren’t waiting for impending student loan debt to crash over you, then by all means do so. If however, you have housing to pay for and debts to pay off, you may very well have to find whatever employment you can.

This goes back to writing your own story, but it takes everyone different lengths of time to discover their career employer or field. For example, it took me three years from college graduation to make the right connections that led to a career in writing, which is what I went to school for. For some, it takes longer.

Ultimately, though, what’s three years out of the rest of your life?

7) Climb a Ledge, Not a Mountain

If you look at the whole picture at once, particularly for those of you with substantial student loans, financial security is impossibly daunting.

But if you break it down into the next step you need to take, you’ll create a series of wins for yourself that will help your confidence grow.

Conclusion

Ultimately, money isn’t worth the anxiety it often produces. Despite your best efforts, there are cultural and economic realities that are simply impossible to predict. If you feel like you’re coming along the path of financial security at a snail’s pace, know that there’s a good chance it’s not an indictment on you.

If you make the smartest choices you can, there isn’t much left but to feel proud and see what results. More often than not, following good advice is going to help things turn out exactly the way you want them to.

Even if it takes a little longer than you want.


By: Ryan Drawdy
September 18, 2017


The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official opinion or suggestions of CenterState Bank.