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?