You have graduated college. You have entered the real world and now it’s time to put on your big person pants and understand money. I bet you don’t even balance your checkbook. (There’s an app for that, duh) Mommy and daddy cannot handle your finances anymore. To be successful in life, you must take control of your money. I’m not saying money is everything or even the most important thing, relationships, jobs, family, friends, should take those spot, but you must understand its CONNECTED to everything. That connection is vital. Money allows you to visit old friends, show appreciation with gifts, take care of your parents… etc. I have found that you cannot take control unless you have some education. It doesn’t have to be a PHD in finance but it has to be something…
Allow this post to be lesson 1:
1. Keep track of debt
Debt at a young age can spiral out of control. Putting everything on a credit card, then falling behind on payments, can make can make everything 15-20% more expensive very quickly.(ave. credit card % rate is 15.19% per credit cards.com weekly rate report ) If you have student loans, truly understand your pay back options. Are they public or private? Is interest tax deductible? Are your payments tied to your income? Know all your options so you can make smart financial decisions.
2. Live below your means
The earlier you learn to live below your means the better. If you spend your life trying to keep up with the Jones’s, you will eventually end up with nothing but worthless stuff. Live below your means to create a cushion and provide financial flexibility in your life.
3. Start an emergency fund
Stuff happens. The best way to overcome most obstacles in life is by having an emergency fund to help you get through tough times. Layoffs, sickness, and accidents all happen. Keep some cash on hand. You will thank your lucky stars when you need it.
4. Contribute to your company retirement plan
Go learn about compound interest and have your money make money for you. The earlier you start investing the moremoney you will have at the end. There will be some tough years where your account actually goes down in value, but at the end, many, many years from now you should have much more money that you started with. Your company retirement plan is an easy place to begin as contributions come right out of your paycheck. Step it up a notch and, see if your employer puts some of their money in your account too.
5. Stick it out
This applies to many things. 1) Your job. You may not like your first/second or even third job, but try to give them all at least 6months – 1 year. It is not in your best interest to be job hopping, always looking for something better. 2) Your investment strategy. Like I wrote previously, the market goes up AND down. But over time, more up than down. Stick with your strategy and do not buy high and sell low. 3) Relationships. At the first sign of trouble do not bail. You actually get stronger by working through issues and problems, not by jumping ship immediately.
6. Be a sponge and work harder/longer
Soak up life experiences from others and see what it takes to be successful. At this young age, be willing to work harder and longer because people will notice. You will be given more responsibilities, get promoted faster, and called upon for important decisions if you demonstrate a commitment to the cause. .As you get older time will seem to slip away, as more and more things demand your attention. Maximize your time while you’re young and hungry. Make the right impression now.
7. Be professional in and out of the office
It’s ok to let loose every now and then, but for the most part be cool. You never know who is watching, your next employer, your next business partner, your spouse. Money is connected to everything so keep cool.
8. Treat yourself occasionally
Spend some money… occasionally. If you buy everything you want just because now you have a regular paycheck, you are setting yourself up for failure. Practice the ancient art of delaying gratification. By delaying, you will appreciate more and spend less.
9. Learn from others mistakes
The people ahead of you already made the money mistakes you are about to make. Don’t think for a second that this time it’s different, because it’s not. Learn from them and get ahead. Be humble and ask questions.
10. Widen the spread
Your income will grow over time and that is excellent. The spread between how much you make and how much you spend should also grow. It’s ok to increase your lifestyle a bit as your income grows, but the amount you save should grow by a larger amount.
Do not stop your education here. Read books/articles/blogs or seek out professional help.
