Top 3 Money Tips for Recent College Graduates

Top 3 Money Tips for Recent College Graduates - picture of graduates in cap and gown raising coffee cups

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So, you’ve made it through college. Congratulations! Now what?

Graduating from college is an exciting and scary time. For most of your life, all you have known is the structured environment of the educational system. Get up, go to class, come home, study, go to sleep. You’ve likely never had to spend much time in the real world, working for a paycheck in order to pay your bills. Even if you had a part-time job, you probably still used some student loan money to help support your college lifestyle. Now that it is over, where do you go from here?

Transitioning from the college life can be hard, both emotionally and financially. Besides navigating the new social circles of the real world, you’ll also need to learn some new money skills that few academic institutions are willing to teach you. If you don’t learn them quickly, you could find yourself under mountains of debt in no time at all. Here are a few money tips to help you get your feet planted firmly on the right financial path.

Learn to Budget

Lord knows, I had no idea what a budget was until I reached my 30’s. Sure, I had heard of a budget. I even thought I was using a budget of my own. As long as I was getting my bills paid on time, everything was just grand. But, paying your bills and budgeting your money are two totally separate things.

If you can learn how to budget your money, you are going to be way ahead of most of your peers. Budgeting your money means that you tell your money what you want it to do. Personally, I like to use a zero-based budget. That means that I take each and every dollar that I am going to make in the month, and I give it a job. I give it a purpose. I put it to work. If you can learn how to use a budget, you’ll be in a great position to succeed.

Get out of Debt

Debt sucks. I hate it. It ties you down. It makes you its prisoner. It requires you to pay it back. Debt means that you are going to end up working longer and harder in order to give a big chunk of your money to somebody else. BOOOOO to that!

Chances are good that you have a few debts already. Hopefully, you aren’t buried under a mountain of student loan debt and/or credit card debt. Regardless of whether it is $1,000 or $100,000, get rid of that debt as quickly as you can. It is hard to save and build wealth if you are consistently having to payback loans. Get out of debt…and stay out of debt. The faster you can get out, the better off you’ll be.

Related: Student Loan Refinancing: Comparing the Best Rates

Live Within Your Means

Did I say live within your means? Let me change that to “Live Below Your Means.”

Yes, I was a starving college kid once too. Yes, earning those first real paychecks is amazing. You’re probably making more money that you’ve ever seen in your life. I know it is tempting to eat out every day, go out every weekend, and buy a brand new car. But, your money may not go as far as you think.

Resist the urge to overspend – especially when you first get out of college. Stick to your budget. Learn what your expenses are going to be. Get your feet on the ground and put a solid financial plan in place. If you can learn to live below your means and not take on any new debt, you are going to set yourself up for a great deal of financial success in the future. If not, you’re just going to join the throngs of others who jump on the earn and spend hamster wheel.

I hope that you can use these money tips to get a great jump-start on your post-college financial life. If you can learn to do these 3 things, you are going to be far ahead of your peers…and you’ll be the person they look and wonder how you did it.

What money tips do you have for recent college graduates? Join the discussion below!

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  1. Sound advice! I might also add “enroll in your employer-sponsored 401k program and fund it at least to the point of the match.” Leaving that on the table is giving up free money! Plus, your future self will thank you big time- putting money away at a young age is so much more powerful than waiting- compound interest rocks!!

    Oh, and the words of warning about debt are so true. We are still paying for some of our dumb moves with student loans and are currently busting our butts to get them gone by 2016.

    1. I would also like to add that to my own list 😉

  2. I think living below your means is excellent advice. Mr. FW and I didn’t inflate our lifestyle much at all after college, which allowed us to save a huge chuck of our pretty small salaries. Resisting that temptation to spend up to (or beyond) our capacity was a game-changer for us and set us on a frugal path from the very beginning.

    1. And now look atcha! You’re killing it 🙂

  3. I will second Dee go a step further to say, max out your 401k from day 1. If you’ve never earned much money, you surely won’t miss it. It is much harder to go back after you’ve gotten used to a larger take home salary. I would also say,plan for 10 year increments instead of assuming you’ll want work in the same field for 30+ years. For us, at least, burn out hit around the decade mark. It’s important to save as much as you can and avoid debt so you have options if you wake up one day and decide you’re job isn’t the end all be all.

    1. I like the 10 year increment idea. That seems to be the burnout point for a lot of people. I moved on from my career to self-employment just at just over a decade as well.

  4. How different would our generation look if we nailed this stuff right out of college! It’s a simple formula to follow but the information has to be received. Hopefully this article just helped out a bunch of college grads to give them the proper start that they need. Great article!

    1. Thanks Talaat! I totally agree, our generation would be in a much better place if we did a better job saving. I think the bigger problem may be that a lot of our peers still haven’t figured it out!

  5. Great tips! I’m hoping we can teach these to HS students and avoid the big student loan debt after graduating college. 🙂

    1. Absolutely. I hope I can guide my daughters so that they don’t end up in student loan debt as well.

  6. My top tip is to not spend your first “real” paycheck until after you receive it. So many college grads go out and buy a new car, a better apartment, and so on before they actually receive their first check. It’s usually for a lot less than they expected due to taxes!

    1. Good tip Michelle. I remember getting my first check and thinking, “Where did all my money go?” Between taxes and insurance coverage, about 25% of it was already gone!

  7. Great tips, Greg! I get this all the time – “As long as I was getting my bills paid on time, everything was just grand.” 🙂 When I speak with recent college graduates (often times at the request of their parents), most have never had a “real” money conversation so we go back to the basics like you outlined. And I stress the important principle of every dollar needing a purpose, otherwise how do you know if you’re spending and/or saving/investing it correctly?

  8. #4 – at least invest in your 401k up to the match at your job (preferably 10% of your salary!)

  9. Great tips Greg!

    My oldest daughter just graduated college and had a lifetime of hearing personal finance advice – whether she wanted it or not!

    The good news is she has always lived within her means and has never had debt. I am still working on the budgeting part with her. 🙂

  10. Good tips! Thanks for sharing them with us. I guess great minds think alike since I recently wrote a similar post too, haha. 😉

  11. Live within your means is really important – especially rent! I live in Washington, DC and the rent here is so expensive. I am constantly contemplating living with roommates or living in a different part of town. If my rent were lower, I would be able to save a lot more.

    Fortunately, I don’t have any student loans to pay off though. 🙂

  12. Great tips, Greg! I would say increasing income should be a major focus of any recent college grad. You have an undergrad degree so the doors are now open for many jobs that you otherwise wouldn’t be qualified for. Besides focusing on getting an entry-level job, also focus on really making a big impact when you start. The better you can leverage your first job the more income you can make at your next job.

  13. I just wish I had known these when I was a recent graduate. If I had, I would have really saved much money and had earlier retirement years. I think I have wasted 4 years because I didn’t know how to budget and live within my means. But, now I really do and that’s why I am in the stage of catching up for those lost years.

  14. So grateful and bless to read post about Top 3 Money Tips for Recent College Graduates. It\’s very great help for me. Thanks a lot for sharing.

  15. I think you just about covered it. Since you just came from college, most people aren’t used to living in luxury anyway, so while you can still tolerate things like roommates and not so nice digs, pay off those loans, save up a ton of money, etc. Once you get a taste of “the good life” it’s harder to go backwards.

  16. Great tips! After graduating college and landing my first official job I became extremely focused on paying off debt and still living below my means. Since the whole purpose of me going to college was to to get a better paying job so I could improve my finances, I saw no purpose in blowing all my money on food and entertainment and living above my means. So far so good.

  17. One of the first things I would suggest is setting up an emergency fund as soon as possible. It doesn’t have to be huge, just as long as it’s there! I think it can also help train someone to start learning how to save each month.

  18. Another tip: don’t run out and buy (or worse, finance!) a new car as a graduation present. At least get yourself established with a job first, save up for a large down payment – or preferably, the entire car – before you make the leap.

    Or just be happy with the car you have. That right there is the best option.

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