5 Must Read Tips For New Graduates

by Joseph · 0 comments

in Personal Finance

Many of you know that I’m currently attending Arizona State University where I’m working on a Global Business/Financial Management Degree. Well I’m coming to the end of the line at ASU, as I am on track to graduate in May. I’m getting pretty excited to graduate and I’m hoping that I’ll be able to find a finance-related job once that day comes, but in the meantime I’ve been studying advice that’s been given to recent graduates. Most of the advice is money-related (although I do read as much as I can on job hunting) as you might have guessed.

I came across a particularly interesting article the other day at Investopedia which lists 5 financial mistakes that many recent college graduates make.

I’m going to list the 5 mistakes for you but I want to turn them around from mistakes to good financial tips. I know that making mistakes are the only way to learn some lessons, but sometimes it’s enough just to read some great tips and advice. I hope that by listing these 5 Must Read Tips for New Graduates that you will all be smart and dedicated enough to learn from them and apply them in your own personal life. So without further ado…

Tip #1: Don’t Just Plan to Save – Actually Save

Let’s face it, recent graduates always have big plans. Nobody goes to school for four years (or longer) to get a degree without having made plans for what they will do with their life after school. Travel the world? Check. Make a six-figure income? Check. We’re dreamers and our dreams usually involve money and often lots of it.

While there’s nothing inherently wrong with desiring money it’s important to remember that in the real world dreams don’t mean much, unless you make them mean something. If you want to have a lot of money you have to teach yourself to save money. If you never learn to save you’ll likely never be wealthy, no matter how much you make a year.

Tip #2: Money (Poorly) Spent is Money Lost

Sometimes it seems like it’s in human nature to be wasteful. We get a great job and an even better paycheck and suddenly we find ourselves wanting needing things that we couldn’t afford before we got said paycheck. While I’m all for enjoying life it’s still a good idea to think a little before spending money, especially large amounts of it. Check out what Investopedia had to say on the matter:

In the real world, assets either appreciate or depreciate. The purchase of a car is the purchase of a depreciating asset; it diminishes in value as soon as it leaves the lot. The same is true for furniture, clothing and expansive television screens.

Tip #3: If You Don’t Control Your Debt, It Will Control You

Here’s some advice to further the last tip that I’ll start off with a question: If you spend uncontrollably what is likely to end up happening? The answer? You’ll likely find that you’ve spent more than you make and your debt levels will start to increase. This is not to say that you shouldn’t take on any debt, but rather the type of debt that often comes from uncontrolled spending.

If you increase your levels of bad debt (credit cards or other unsecured) then you’ll find your net worth quickly decrease and your cash flow decrease as well. While a lower net worth is bad news in the long run a low or negative cash flow can be especially dangerous to your financial health. Eventually if you don’t control the amount of debt that you’ve taken on you’ll find that it is controlling you – and that is a situation you never want to find yourself in.

Tip #4: Build Yourself a Positive Credit Rating

In the U.S. credit is everything. Without a positive credit rating you’ll have a difficult time buying a house, your insurance rates will be higher and you’ll find yourself with exorbitant interest rates on any loans that you do qualify for. As I’ve pointed out in a previous post your credit score literally defines who you are to most financial institutions. Therefore in order to carve out a favorable image of your credit-self you’ll need to build yourself a positive credit rating.

If you’re interested in how you can increase your credit rating then don’t forget to click on the link above. You’ll find a wealth of information on how your credit score is calculated and what it can have an affect on.

Tip #5: You’re Going To Eventually Die – Make Sure You’re Prepared

They say only two things in life are certain: taxes and death. The cold hard fact is that you’re going to eventually die – we all are – and it’s best to prepare early for the inevitable, because you never know when that day is going to come. It’s important to prepare for your death, not only by getting life insurance (in order to support any of your family that depended on your income) but also by preparing a will or trust in order to pass on your assets to those closest to you (and take care of funeral expenses, etc.).

I’ll be honest with you here – I’ve not done all of the above tips. I’ve followed most of them but I’ve made mistakes as well. I really like the above advice and I completely believe that if new and recent graduates were to follow them religiously they would find themselves in a very happy place. Good luck out there.

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