The Best Financial Advice for New College Graduates

6 Things Every New College Graduate Should Do

Girl standing on a stack of books, putting money into a graduation cap
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If you're about to graduate from college or have recently graduated, congratulations! For many, college graduation marks a major transition into adulthood and the world of post-graduate employment and a new phase of personal finance. Though it is not true that every decision you make in your twenties will have lasting effects on the course of your adult life, there are some that have bigger implications than others, and many of those decisions will be financial ones.

So as a free graduation gift, here is some of the best financial advice for new graduates we could find.

Best Financial Advice for New College Graduates

  1. The Higher Paying Job Isn't Always the Best Job: If as a college graduate you've chosen your desired career path, remember that a lower-paying entry job in your desired field is likely to be a better deal in the long run than a higher-paying job in a field you have no long-term interest in. Accepting a job in an unrelated field simply because it pays more can either delay your career progress or worse, trap you in a field of work that may not make you happy.
  2. Think Twice Before Moving In With Your Parents: Thinking of moving back in with your parents to save money? Think again. It's difficult to move back home when you've been independent. You'll grow faster and learn more by being on your own, even though it may be a struggle at first. Many college graduates return to their parents' home to save money, but most of them lack the discipline to save, and end up blowing their earnings on cars, entertainment, electronic gadgets, and their social life. Moving home will work for you only if you're sure you won't fall into that spending trap.
  1. Don't Buy a New Car: You may be tired of driving a clunker in college or having no car at all, but buying a brand new car is a costly mistake that could keep you on a tight budget for years. Instead, consider buying a car that's one to three years old and save a bundle of cash. You can get a car that looks like new for a lot less money, and instead save for another important purchase, like a down payment on a house. It might be worth checking out the article following article: Your Car Payment Can Keep You From Qualifying for a Mortgage.
  1. Get into the Budget Habit: Don't get turned off by the "B" word. Budgeting isn't simply an exercise of "living within your means;" it's about being knowledgeable and prepared for whatever life throws at you...financially. Think of a budget as a spending plan to guide your spending and saving so you can have the things you really want and that really matter to you. Don't get sucked into trying to afford a certain lifestyle. For everything you need to know about budgets, from getting started to staying motivated, be sure to check out the resources at Budgeting 101
  2. Start Saving Now: When you're creating your budget, be sure to incorporate savings into your "expenses" equation. This means building up an emergency or "rainy day" fund, saving up for larger future purchases, and yes, contributing to a retirement account. If you're lucky enough to have access to an employer retirement plan like a 401k, use it! If they offer some sort of contribution match, try to maximize it. If not, open an IRA and begin making contributions there. By starting to save for retirement in your twenties, you can greatly impact your future financial security.
  3. Educate Yourself About Personal Finance: When you needed to learn about mathematics, you took a math course or read a math textbook. The best way to learn about personal finance basics is to read a good personal finance book - one that covers all the basics without boring you to tears. That's why I wrote Everything Personal Finance in Your 20s and 30s, available at Amazon.com and other online bookstores and at your local brick and mortar bookstore. It's an easy read and a great overview of how the world of money works.

    Good luck!