Finance & Wealth

Priceless Financial Advice For Recent Graduates

By Manisha Thakor | Sep 23, 2020
Manisha Thakor | ACHNET

If you could rewind your life to graduation from high school or college, what would you have done differently with your money?

Confession: I'm a financial voyeur. For as long as I can remember I've been fascinated by the unique relationships people (and especially women) have with their money. So when I was recently asked by my Alma Mater, Wellesley College, to serve as a Financial Fellow in residence and create some unique personal finance programming for students and alums, I jumped at the chance.

One of the most popular events we held was called "Powerful Women and Their Pocketbooks." In this session, I asked three VERY successful Wellesley alums (C-suite level, corporate board member, business founder, etc.) what their best and worse financial moves were right out of college.

By design, we did not compare notes before-hand. Alums were from the classes of '68, '73, and '90 - so spanning various stages in businesses receptivity to women leaders. What struck me the most was how incredibly similar our best tips (and worst trip ups) were despite very different ages, career choices, and life experiences. The top three pieces of advice every one of us gave were:

1. Learn to live within your means right out of the gate- and understand that means your life likely won't look like mom and dad's right away.

2. Bow down and respect the incredible power of compounding- and understand that means your life likely won't look like mom and dad's right away.

3. Be an advocate for your own financial security- and understand that means your life likely won't look like mom and dad's right away.

The biggest mistake all four of us ‘fessed up to, had to do primarily with points 2 and 3. In my case, my dad had to drag me kicking and screaming in my early 20s to move my hard-earned long-term savings into equities (I'm incredibly risk adverse). My other big mistake was thinking that if I just kept my head down, was a "nice girl," and worked my backside off... my work would speak for itself and there was no need to proactively negotiate my salary.

So, if you have a young grad in your life - I'd like to ask you a favor. Please share with them some of your best and worst financial moves. The more intergenerational dialogue we have about the basics of personal finance the better off this country will be. And if you are looking for a practical graduation gift, I highly recommend GENERATION EARN, written by Kimberly Palmer, Senior Editor of Money and Business for US News and World Report. To get your mind marinating about possible topics you can talk about with the young grads in your life, Kimberly kindly shares below some very powerful tips. Note the common themes! [For more of Kimberly you can follow her on Twitter at @AlphaConsumer, visit her book's website, and read her column in US News and World Report]

7 Money Mistakes Today's College Grads Make (and how to avoid them)

by Kimberly Palmer of US News and World Report

This year’s college graduates face a particularly daunting array of financial challenges: Hefty student loan debt. A tough job market. Complicated financial options, from Roth IRAs to consolidating student loans. It’s overwhelming, but not insurmountable. These seven mistakes and their solutions, adapted from my book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back, are designed to help college grads bypass common hiccups and take control of their financial lives.

1. The Problem: Taking on too much debt – or not enough. Too much debt can weigh down recent grads, forcing them to spend more money on interest and fees than on fun and other goals. The new credit card regulations make it harder for anyone under the age of 21 without their own income to take out cards of their own, which could make post-graduation overspending even more tempting and as intoxicating as frat parties are to college freshmen. At the same time, the recent recession has led many young people take the debt-is-bad message too literally. Avoiding loans altogether, however, can hurt college grads. Sometimes, student loans for graduate school or a mortgage are good investments. Being responsible for credit accounts also allows 20-somethings to build their credit history, which is required if one day they want to take out a mortgage, auto loan, or other type of loan.

The solution: Build your credit history slowly and steadily, by opening up accounts in your own name and then paying them off on time.

2. The Problem: Becoming victim to rapid lifestyle inflation. You’re a recent college grad, so that means you probably need a new car, new apartment, new sofa, and a new… Wait a minute. Not only