Posted by Lending Club :: June 18, 2008 @ 1:25 pm
Just graduate from college?
If you did, you're probably getting advice right and left from friends and family. Even that creepy old neighbor of yours that showed up to your grad party uninvited gave you advice.
While some of their advice is sound, the one topic they will probably avoid is personal finance. No one says, "Make sure to pay down your credit cards!" when giving you advice. Even if that's the exact advice you need.
So here it is. The practical financial advice (plus a few general tips) that very few people will share with you. The 21 tips you really need to survive the "Real World"...
1. Do Not Buy a New Car
I can't tell you how many of my college friends bought new cars within a year of graduation. Why? Because they looked at their new shiny paycheck, saw a comma in it, and suddenly felt entitled to a new car. Don't buy a new car. If your old college junker is falling apart, get a used car, but whatever you do, don't buy new. Show the world that you actually learned something in college about depreciating assets.
2. Do Not Get a Fancy Apartment
Sure, you can pay 50% of your paycheck and get that fancy pad downtown, but why not rent a house with some college friends and only spend 20% of your take home on housing? Put that other 30% into a savings account and in a few years you'll be the first one in your class buying a nice little condo, while half of your friends are still living with their parents because they couldn't manage their money
3. Do Rent from Your Parents
Speaking of living with your parents, if you don't have a job lined up, this is likely where you'll end up. But don't expect to freeload here. Your parents have had a few years of you out of the house, and it's a good chance they've turned your room into storage. Be an adult and pay rent to your parents when you move back in with them. Even if it's a severely reduced rate, you are an adult now, and that means paying for where you sleep.
4. Don't Happy Hour Every Day
Going to happy hour every day after work is a sure way to: 1. Continue that bad drinking habit you need to quit and 2. blow $200-$300 a month. Join the Happy Hour crew once a week, but limit how much you spend on alcohol as you get adjusted to your new budget. IF you do feel the need to go out every night, remember that Coke is cheap and you get free refills!
5. Commit to Your First Job
Your first real job out of college can be tough. Really tough. But if you quit your first job too soon, it's a terrible way to start off your career. Commit to stick with your job, even when it sucks. You may realize it's not what you were expecting, but most things in life aren't. If after 2 years, you've given it your best shot, move on with a good recommendation and not having burned any bridges.
6. Don't Get Any More Credit Cards
If you're like most college graduates, you already have a credit card. Maybe even more than one. Now that you have a higher income, it's not time for a higher credit limit. It's time to pay down all those late night beer runs you charged the past few years. Flashing plastic may have been cool in college, but in the "real world" it just means you're in debt.
7. Save Your Graduation Money
Money is a common graduation gift. I remember when I graduated from college I took home around $600 once it was all said in done. While it's nice to buy something for yourself, sock away at least 50% or more of any graduation money you receive. This way you can still show Grandma the cool new tie you bought, and be financially savvy.
8. Craigslist and Cash Are Your Friends
Stuff comes and goes. While it may seem important now to have that killer stereo system for your new pad, in 3 years when you're still paying minimums on your credit cards, it will look pretty silly. You can furnish your new place over time. Find something you think you need, then save up for it. It's so much better to lounge on a futon you've paid cash for.
9. Practice for Interviews
Sure you got through college by cramming at the last minute, but job interviews are a whole different ballgame. By practicing for your interviews, you'll not only have more informed answers, you'll be much more confident in yourself. Be sure and brush up on common interview questions.
10. Own Your Adulthood
Just because your parents always bought a certain brand of detergent, doesn't mean you have too. There are plenty of inexpensive ways to live a greener and healthy life after your college days. And without those late night Ultimate Frisbee games, you're going to want to watch what you eat from here on out.
11. Start an Emergency Fund
With "Real Life" comes more real potential problems. An emergency fund is the best way to make sure you're prepared should a financial emergency arrive. Save up a minimum of $1000 first, and then try to add to that each month with even just a $100. You never know when your car might die, or an unexpected funeral arise...but you can be prepared.
12. Spend Less Than You Earn
Do I really need to explain this one? If you're never done a budget, now is the time. You likely have student loans, housing, possibly insurance, cell phone, internet, etc. The bills start to add up, and you need to know where you're money is going. Spend less than you earn!
13. Budget Online
Budgeting has come a long way in the last few years. Forget a spreadsheet. Forget a check register. Track your spending online with Mint, Geezeo, or Wesabe. You can setup a sick looking budget at Geezeo in less than 5 minutes. You can even set it up so that you can text a number and receive your account balances back to you in 10 seconds. How cool is that?
14. Prepare to Be Fired
I know it's sounds pessimistic, but if you knew you were going to be fired in 2 months, 1 month, how differently would you manage your finances? Kid yourself and your spending habits into thinking you're getting the ax for a few months. Build up a good emergency fund and God forbid you do get laid off, you'll be prepared.
15. Keep Living like a Student
Just because you are in the "Real World" now does not mean you need to abandon all your student ways. In fact, if you lived frugally in college, there is no reason to change that! Keep that bike you rode around in, and ride it to work. Share a house with roommates, buy furniture off craigslist. All those good frugal "college habits" are really just good habits no matter where you are in life. Just get rid of that lava lamp, seriously, it's not cool anymore.
16. Work Your Butt Off
Coming into your new job, you're going to be on the new kid in town. You'll also likely have a different skill set than many of your co-workers who are older than you. They are going to be wary of your youth. Show them you know how to work hard, and keep your head down the first few months. Begin making a list of suggestions or improvements you'd like to bring up to your boss, but don't share them all right away. Earn some respect your first few months, and your game-changing ideas will be much better received by your older managers.
17. Love The Brownbag
Brown bagging your lunch each day can save you $5 a day just on lunches. That's an extra $1200 a year that you could put towards retirement or put in some aggressive investments. Think making lunch each day is hard? Don't make lunch each day. Make 30 sandwiches at once and be done with it. You can make a whole month's worth of sandwiches for $6.99...
18. Learn to Cook Just 5 Meals
Why 5 Meals? Because 5 means at least during the week you don't have to repeat a meal. Plus, if you're single, you can make a meal for 4 and now have 3 dinners of leftovers. Cooking for one is no fun, so don't do it. Cook for 4 and get some quality Tupperware. Here's 5 Easy Meals for under $10...
19. Find Friends Outside Your Job
Being friends with your coworkers is great, but having activities and friends outside your work will keep you balanced. Join a kickball league, or a post-college group at your church, or make a point to keep in touch with any college buddies that are still in your area. In the working world, social plans are not as easy to come by as in college. You have to be much more proactive about being active and social. Don't be afraid to pick up the phone and setup a party or game night in advance.
20. Never Stop Learning
Just because you are out of college, doesn't mean your learning days are over. Keep your mind sharp. Read a book (for fun, not class!). Reading keeps your mind fresh and a good fantasy or fiction novel can do wonders for your creativity. After you settle into your new job, take a random class (tennis, rock climbing, theatre, Photoshop) at a local community college. You'll really appreciate classes when you're just taking them to enrich your life. These small escapes will keep you sane if the "Real World" is getting you down.
21. Never Stop Dreaming
Are your best days behind you? Only if you want them to be. You're in the world completely now. You have the freedom and ability to move up in your company. You can start moonlighting your great business idea in the evening if you want. Don't think for a second you can't achieve your dreams. And if you want to start a business, or pay off your credit cards, Lending Club can help.
Did I miss a tip? What other tips would you give new college graduates?
Print This Post
23 Comments
I'm a year out, and this is still a really good list to keep in
mind. Now if only I didn't live in SF I could actually shoot to
keep rent cheap. Some great tips though. One question: Where is
coke cheap and your stash refilled for free? jk
There are a few at the bottom that are really good. But there are a
lot of them that really suck.
I would emphasize that while saving money, college grads should
begin to learn how to invest. The learning process can take some
time and takes more effort than simply participating in a 401(k)
plan. At 20s Money we
talk a lot about how 20-somethings can position themselves for
financial success down the road. Great post and great blog. I look
forward to reading more.
Great tips!! "Craigslist and Cash Are Your Friends" < but how
craigslist can help is not explained.
I graduated a year ago, and am going back for my MBA- these are
Great
some really good tips and life lessons to keep in mind...I love how
your first tip is to not buy a new car- everyone
keeps asking me when I'm going to upgrade, and I just tell them my
99 Neon is running fine, even with no air conditioner.
post.
I'm still a student and I think this is some great advice, I
bookmarked it right away, tnx
Nice tips and blog. I like this article
Overall that is a great list. There are a couple of items/details
that I would like to add: 1) "Do not buy a new car." I make good
money and I still have never bought a new car. The first year
depreciation is just not worth it with reliable models. I buy cars
that is two or three years old. If your friends (or girlfriend)
like you because you have the coolest car, is that who you really
want hang out with in the long term? I doubt that I will ever buy a
new car, Finally, I talked my parents out of buying a new car the
last time they purchased. 11/12) Start an emergency fund and spend
less than you earn. I still remember when I bought my first house.
I mentioned to some older co-workers that I hung out with regularly
(see #20) that we had a good size down payment. Several people were
surprised. Some of them did not know their own house. I followed
numbers 1, 2, 4, 6, 11, and 12 completely. 17) Brownbag it: If you
can find a lunch for $5 per day you are working hard at getting a
deal. I live where it is cheap and I am lucky if lunch out is less
than $7. Just across the street I have spent $20. Just the seven
dollar meals over time can hammer your budget. 20)
Friends outside work are important for both sanity and if you ever
lose your job. Friends from work tend to evaporate along with a job
(see #14). short anecdote One of my co-workers tells the
story of the guy who started in their new hire group who refused to
buy the new car, refused to eat out with the group, or go to happy
hour, and so and on. He retried at 45 and everyone else from the
group is still working. She said that everyone used to make fun of
the guy when they were 25, just 20 years later everyone talks about
him with envy. I think he followed the entire above list.
Good article- specially about not spending more than you earn. It
would seem pretty obvious to most, but with so many places pushing
credit down your throat & up your nose, you lose sight of
actually saving up money to buy stuff.
Man,, If only you wrote this about 5 years ago... I'm more than 30k
in debt, and can't find work..yea I live with my mom... College was
great though.. man
Well,i supose its a good list if you lack complete common sense. I
love that about you americans.... you all need that "caution"
label. Make alot of funny news for us up north. Good luck for
anyone graduating college
This list is preparing young people to be cogs in corporate
machines and to be satisfied with just scraping by. It fosters a
"scarcity attitude". I'm not saying one should be reckless but one
shouldn't be too fearful either.
I understand the need to be prepared if you are unexpectedly fired,
but doesn't #14 "Prepare to be fired" contradict #16 "Work your
butt off." Its hard to be the best you can be at your job when you
have the mentality that you can be fired at any minute. My
suggestion would to always always always network. Keep in touch
with friends, collegues, and relatives who have connections in
career paths similar to your own. That way in the off chance that
you are fired, you can rely on them to get you back on your feet.
There is never a more true saying than "its not what you know, but
who you know." I have a lot of friends from college who graduated
with good grades and impressive majors that couldn't get jobs. My
dad helped me get employement with a company he used to work for,
and although it may seem like coping out to some, I've never felt
like less of a person for having my dad land me a job.
I loved the list. Totally agree with it. I'd add one, though: be
prepared to lose touch with more people than you originally
expected. It shocked me when I graduated college,
the volume of people who I almost immediately lost track of. In
retrospect, it made sense -- keeping in touch with high school
friends was easy because we all went to college afterwards and were
all having (essentially) the same experiences and schedules.
Graduating college, however, meant some of us went to work at 9-5
jobs, some went to work retail or food service, some went on to
more school and all of us were incredibly busy. In a short period
of time I went from feeling like I had dozens of close friends from
college to just a few. It made the transition much more difficult,
and I think if I'd' have been more prepared for it, I probably
would have been able to handle it much more gracefully.
ING Direct is a great way to stash away some money and get a good
interest rate. I've set up an automatic savings plan and put 10% of
each paycheck in there (yes, you really really can do it!) and it
really came in handy when I needed to dip into my emergency fund.
My tip: don't make decisions for yourself based on your friends. If
you can't figure out how they afford to live the way they do (going
out to eat, drinking, trips, etc.) then they probably are in
serious debt (and in denial about it) and you don't want to model
yourself based on that. Don't be ashamed to be cheap. Friends are
harder to come by after college. It's like starting kindergarten
all over again. Be brave and put yourself out there to make friends
with whomever you can. You can weed them out over time and settle
in one a few good ones, but it can really get lonely at first if
you don't try!
I have to disagree with your first one. I have always only bought
new cars - I don't trust used cars, because you never know for sure
how well-maintained they were. I do agree with not buying one
immediately after graduation, though. I drove my '98 Escort for
almost 10 years, and when it finally broke down and died I had
enough money saved up to buy a new '08 Yaris outright. That's a
good feeling.
Great list... I knew a lot of these, but wished I had actually
followed them when I graduated 5 years ago. About 3 years out of
college, I moved to a very expensive city (Dallas) and got into a
lot of credit card debt trying to maintain the lifestyle I had in
my much cheaper hometown. It didn't help that I grew to hate my
line of work. Now I'm back home, living with my aunt, paying down
debt and saving up for a down payment on a house. And I'm so much
happier now that I'm not constantly worried about money. I have to
say -- someone has to buy the new cars... If you plan on driving it
until the wheels fall off, it's not necessarily a bad investment.
[...] 21 tips piece was originally published here. Photo [...]
Rule #22. Join a church. Lots of free, home-cooked meals at church
potluck gatherings. Age-segregated classes to help you meet people
your own age; free church-sponsored sporting/social events; mentors
willing to help if you do get laid off. And churches come in all
flavors from conservative to liberal. Visit some and see which ones
make you comfortable (or have the cutest girls/guys). Believe me,
to a lot of women, a guy who has a spiritual life is one sexy dude.
Screw all that "live green" crap. That nonsense is garbage and only
designed to make you feel guilty. Use your brain and stop caving in
to the pop culture groupthink B.S..
[...] 21 Incredibly Practical Tips to Survive the "Real World" (A
Must … [...]
[...] train because they never lose. Here’s a near-miss that will
make you cringe. * 21 Incredibly Practical Tips to Survive the
‘Real World’ (A Must-Read for Any New College Grad). Although you
really [...]
Thank you very much. I'll be a college grad in the spring and I was
freaking out a bit. This definitely put me at ease
Leave a Reply