My Advice to Recent College Grads

by Ryan

It’s commencement time again and I’d like to write a short letter to all those recent college grads with big hopes and dreams and twinkles in their eyes for a bright future. In fact, I was you… almost two years ago already (wow time flies). Unsure of what the future would bring, but eager to start a new chapter of my life.

Just two short years ago I walked across the podium and received my bachelors degree in the field of business. It was a great feeling, knowing I was done and that this particular journey was coming to a close, thus opening a new door and new experiences. For the past four years I could walk down the hall, or the street and be next to my best friends. I could take classes on a host of interesting topics and spend my afternoons reading or enjoying a group event. I had an excuse for living a minimalist lifestyle and I didn’t have to worry about bills! Life, was easy.

After moving back in with the parents upon graduation, changing employers five times and getting rejected hundreds of times for jobs that I thought I was clearly qualified for, there are a few lessons I’ve learned along the way and I’d like to share with this year’s college grads. I hope you take this advice with open ears and even follow some it upon your entrance to the real world.

Stay Living Like You’re Living Today

In college you own a futon, some plastic crates, a computer, and enough ramen to feed a small village. Continue living like that. Maintain a very small inventory (mine can fit in two backpacks) and continue living in a small place. It’s a lot easier to stay living in a small place than it will be to downsize in the future. Drinking wise (if you can’t seem to kick the habit), continue to drink pabst, hamms, and crappy tequila. You’re not rich enough for Grey Goose and Heinekins so stop it! Live small and live below your means.

Don’t Buy a New Car.

Everyone and their mother who graduates college and gets a new job seems to immediately make one of the worse financial decisions available. They buy a new car. Then they take a picture of themselves next to it and post it on facebook and say “Look, I’ve made it!” – It’s like a little mini victory on the way to the American dream. However, they’ve just made a horrible decision that will ensure that they stay in the rat race for several more years. My advice – buy a scooter, a small used compact, or keep the beater you’ve been driving around in college.

Don’t Buy a House.

I tried to buy a house, three times in fact, during and shortly after college. Want to know my feelings about that now? Thrilled that I never closed on any of the properties! Although you may feel like you’re throwing money down the drain by renting the only way I would advise buying a house is if you have 20% down, take on roommates to help you cover the mortgage, and are willing to stay in that same location for 4-5 years minimum. Think about where you were 4-5 years ago when entering college and how much you’ve changed… that’s why it’s probably not best to buy a house. You’ll still continue to change and may land that “perfect job” in another city so by purchasing a home you’re limiting your options and as we’ve seen over the past few years, you might even lose money in doing so.

Perfect Jobs Don’t Exist.

There are wayyyy too many variables to make the perfect job exist. The job title, the boss, the co-workers, job responsibilities, location, hours, rate of pay, and on and on. There is no such thing as a perfect job, and even if it’s currently feeling perfect, that will change eventually. I’m saying this to save you time. Instead of searching for an illusive dream job, begin to create your own by developing skills that interest you and that can be used in your field of interest. If you haven’t noticed there’s been a shift towards freelance work and employees who have a particular skill set that are hired temporarily. Your abilities and skill set will help you get hired and you can literally create your own position by teaching yourself these skills. I taught myself web development for fun after college and look where it took me… here, writing to you.

Open a Roth IRA And Max it Out

If you’re lucky enough to have a decent paying job and some disposible income, open a Roth IRA and max it out ($5,000 annual limit at the moment). Since you’re most likely not a complex investor, just jump over to a site like Vanguard and open the Vanguard 500 fund to mirror the S & P 500 (please remember I’m not a financial advisor). You can always switch stocks later down the road when you learn how to pick investments, but this will get you started. If you take this one piece of advice your $5,000 investment will be worth over $300,000 43 years from now when you’re ready to retire. You’re so young right now that the time value of money is on your side… capture it.

Enjoy the Journey, Not the Destination

Many successful people I talk to look back fondly on their struggles and the challenges of starting from scratch. The journey and your quest for finding out who you are, and what success means to you are the fun parts. If you’ve ever played a video game, or any game for this matter, you know this feeling. You conquer level after level, challenging yourself and struggling onwards. Then after hours or days of work and persistence you beat the game, and then what? You’re bored and the game is now easy and not fun. Life is much the same, so enjoy your journey and your small victories along the way as that is where success is found, not in the destination.

Try Something New And do What You’ve Been Dreaming About

We all have dreams and goals. The difference between those who accomplish them and those who don’t is action. Things have a way of working out when you head in the direction of your dreams and now is the time where you have unlimited freedom to begin pursuing them. For me, that action was buying a one way ticket to Hawaii. For you, it may mean driving across the country, starting a business, teaching english is Egypt, or joining the peace corps. If you don’t start taking action towards your dreams now, you’ll hold that regret forever.

Avoid Horrible Investments

As I mentioned before cars are a bad investment, but so it smoking and drinking. Try to kick these habits as soon as you can because they’ll drain your finances and leave you with nothing more than bad health, embarassing pictures on facebook, and possibly some regrets. And speaking of possible horrible investments…

Don’t Get Married Too Soon

It’s only been about 4 years since you graduated high school and became old enough to vote. As a 22-23 year old you still have about 60 years to live so why are you in a rush? Divorce rates are over 50% at the moment and you have a lot of growing to do before you know exactly who you, and your spouse to be, are. Don’t be in a rush to tie the knot. You’ve just begun your life, you don’t need to be married to share these experiences with your significant other, and a few more years won’t kill you… I promise.

Best of Luck!

Life will not come to you on a silver platter after you graduate with a degree. I’ve learned that over the past two years as it seems holding said degree is becoming commonplace and not exactly the golden ticket it used to be. You may not get a job related to your field of study, you may not achieve ultimate happiness right away, and you may struggle horribly at first, but if it was easy, would it be as much fun?

You, and I, have a long way ahead of us in life. Instead of focusing on the destination and finding “perfect” things enjoy the strengths you have today and what you have that older people don’t. Time, and the ability to do anything you want at this very moment. So instead of thinking you need to go achieve professional success in your field of choice you decided upon when you were in some guidance counselers office at age 17, think hard at this very moment about how you’d like to lead your life and the experiences you’d like to have. You can do anything you want, what’s stopping you?

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{ 24 comments… read them below or add one }

Darren June 2, 2010 at 9:55 am

Nice list. However, I’d suggest ditching some of the ramen and looking for healthier alternatives.

Doing this should increase your chances of seeing your retirement, where you can enjoy your Roth IRA money!
.-= Darren´s last blog ..Use Math To Alleviate Fear Of Stock Market Volatility =-.

al June 2, 2010 at 12:14 pm

wow what a nice article. I should email this to my brother who is starting med school next year. He is partying up, spending money like there is no tomorrow, taking out those student loans and after med school he is to be in high 6 figure debt. And he thinks being a doctor will solve his problems (if he actually gets accepted and finishes med school) and after that like you said “perfect job don’t exist”

I have done it all. Worked for the man, worked for myself, work for good and bad jobs. And I still struggle despite my vast experience (graduated in 2000)

Only one thing, about your advise with “Don’t Get Married Too Soon” …if you marry a rich one perhaps that’s a good investment 😉

Financial Samurai June 2, 2010 at 4:18 pm

It definitely is good to live a little, and really KNOW where you want to settle down before buying a house.

Buying a house at 22-23 is kinda crazy, cuz who knows where you’ll be in 3-5 years time? Could be anywhere!

Your sense of urgency will only grow and grow Ryan. Look forward to following your journey. I enjoy posts like this.

Cheers,

Sam
.-= Financial Samurai´s last blog ..Is Becoming A Millionaire The Rule Rather Than The Exception? =-.

Courtney Carver June 2, 2010 at 5:06 pm

If only I had this advice 20 years ago!
.-= Courtney Carver´s last blog ..How to Simplify your Closet =-.

Roman Soluk June 2, 2010 at 8:35 pm

Very nice tips, Ryan! Thanks a lot for sharing them! Very true, by the way.

Besides, I also received my degree 2 years ago. 😉
.-= Roman Soluk´s last blog ..Drinking enough water =-.

Moon Hussain June 3, 2010 at 4:44 am

Lots of great advice there. I’ve made some of them. I agree with Darren though, no need for loads of ramen….. thumbs up for healthier alternatives.
.-= Moon Hussain´s last blog ..How I Added 200+ People On Twitter Within 2 Weeks =-.

Investing Newbie June 3, 2010 at 6:39 am

I’m sure colleges are going to be clamoring at your door inviting you to be the guest speaker at next year’s commencements. This was a wonderful article. I’ll definitely pass it on to some recent graduates that I know.
.-= Investing Newbie´s last blog ..2010 Goals as of May 2010 =-.

Kristine June 3, 2010 at 9:04 am

It’s all about the journey. I know I can get so focused on my goals, that I take for granted all the little things that happen along the way. Even though I’ve reached a desired goal like buying a home, getting married, and having our first child, there are still many things to enjoy within those achievements. My happiness lies in the little things along the way to the destination. :)

Andrea June 3, 2010 at 9:37 am

Wow,
This is great advice! I wish I had it when I graduated years ago. I will definitely pass it on to a few people that I know who have graduated recently.
.-= Andrea´s last blog ..What Do You Think About Money? | Savings Scoop =-.

Mrs. Money June 3, 2010 at 10:20 am

Great advice! I wish there was some way that all graduating seniors could see this. I think they would be a lot better prepared for life if they did.
.-= Mrs. Money´s last blog ..Run to the Doctor, or Tough it Out? =-.

MyFinancialObjectives June 3, 2010 at 4:33 pm

I would also add start trying to pay off any student loan debt quickly. The sooner you pay off your debt, the sooner you will be able to accomplish more things on your list!
.-= MyFinancialObjectives´s last blog ..Entrepreneur! =-.

Neal - Sax Station June 3, 2010 at 12:13 pm

Hey Ryan, cool post. You cover a lot of ground.

You seem to be pretty into the ramen thing, lol.

Another issue that a lot of recent college graduates have is student loan payments. One of my friends had about 40k in loans. Moving in with your family for a little while can help out paying those off, although some of his friends looked down on that. Otherwise payments can become ridiculous. I read some stories about students who had 100k and even 200k in student loans (students at NYU).

One way I think about it is how much ROI (return on investment) paying off the loans returns. If the interest rate is 5% then you’re paying 5% every month.

For a $1000 loan, (.05*1000*12)/1000 = paying $600 in interest every year = 60% (negative) ROI.

Since loans require a minimum payment, you’ll end up paying a bit less than that. But not by a lot.

And if inflation is approximately 5%, you’re losing even more if you only pay the minimum.

I think it’s good to pay more than the minimum, but still have an emergency fund in case you need it.

What do you think about debt and loans Ryan?
.-= Neal – Sax Station´s last blog ..Thelonious Monk – Well You Needn’t =-.

Aury (Thunderdrake) June 6, 2010 at 9:54 am

Of all the things I could advise someone, maxing out someone’s tax free investment account would be one of them. Do what you will with your money, but keep. Building. Up. Assets.

Rawr. >:3
.-= Aury (Thunderdrake)´s last blog ..3 more things you can put in your hoard =-.

S June 6, 2010 at 10:00 am

Thanks for all of the information! It really helps having a reliable source so go to.

Lee | Search Engine Viking June 7, 2010 at 12:23 pm

Woohoo! A reference to Hamm’s “The beer from the land of Sky Blue Waters.” I remember buying a box of that for every college party I went to. I’d drop about 5 bucks, while my friends would spend four or five times that amount and then get all butt-hurt when other people would drink them.

… To this day I still show up at house parties with a 12 pack of Hamm’s and some money left over in my wallet.

Rock On
Lee
.-= Lee | Search Engine Viking´s last blog ..Your Brain Needs A Vacation =-.

Make Money Online Free June 8, 2010 at 1:04 pm

Totally agreed with everything you’ve said!

I myself just got married and hubby and I moved into a new apartment. Never before have I worried where the money will “come from”. I mean we both have jobs.. nothing fabulous, but we work. But so many new responsibilities have come with the move that I’m worried about the money and wish I’d saved more when I was “younger”. All that money wasted eating out and partying.. could’ve definitely helped pay some bills right now.

Great post and great advice. Hope some of the younger ones take it!

– TriNi
.-= Make Money Online Free´s last blog ..Take Surveys On PineCone Research And Make Money Online Free! =-.

Thomas Craig Consulting June 9, 2010 at 12:22 am

Nice list, although I’d have to disagree with the item about buying a home, if you can afford it then buy rather then renting, 95% of the time, if you sell you will make some sort of profit, this is better then throwing your money every month paying someone else’s mortgage.
.-= Thomas Craig Consulting´s last blog ..10 Excellent Sites for Finding Free Fonts =-.

Little House June 10, 2010 at 3:33 am

What a great article and wonderful advice for new grads. It’s been many, many years since I graduated but I still remember that feeling of uncertainty. It was exhilarating and scary all at the same time. Oh, the *good ole days*!
.-= Little House´s last blog ..Tuesday Tips, Week 13 =-.

Eric June 10, 2010 at 11:07 am

This is a great roundup of tips. I was pretty good with most of them when I finished school. I didn’t get the new car until my old Volvo stationwagon broke down. I am not quite there on the Roth, but I do put a heck of a lot in my 401(k), so I’ll call it even.

I learned right away what a horrible job is like. Fortunately, I got out after 5 months and have enjoyed my current company for over two years.
.-= Eric´s last blog ..Ask The Readers: Student Loan or Savings =-.

Forest June 13, 2010 at 2:13 am

Great post, if people can stay away from spending those first few paychecks after college they can get a good habit going for their whole life…. It’s easy to get dragged into bad habits when you see all those $$$$ in your account.
.-= Forest´s last blog ..Is Minimalism a worthwhile form of activism? =-.

Anthony June 23, 2010 at 4:59 am

I totally get what Ryan is saying… rush, rush, rush, don’t do it. I am currently in college and know what it feels like to be inpatient for success or just things that I want in life that I sometimes notice that I am rushing into things, without thinking about all the disadvantages that can be very damaging with difficulties to turn around what I have started. I mean, you see some people with nice things and say to yourself, I want that and want that now. You know the feeling, but what I fail to comprehend right away is that those people who have nice things in their life, I am sure a lot of patience was involved in all their decision making.
.-= Anthony´s last blog ..Lady Gaga Plays Risky At Yankees Game =-.

Belmont Thornton June 24, 2010 at 3:22 am

I agree with the points in this article. With the financial crisis college grads are the ones having a nightmare. Huge debts and less paying jobs, it is a bad senerio but i belive the best option is to be focused as ‘Every dark cloud has a silver lining’

Jeff S. July 19, 2010 at 6:42 am

Great advice all around. It makes total sense to simply living within your means – what you actually have today, without credit – instead of living like you’re going to come into all this money. The tip about not buying a new car right away makes the most sense of all.
.-= Jeff S.´s last blog ..Summer Scholarship Deadlines- Get These at the Last Minute! =-.

Nick October 26, 2010 at 5:32 pm

As a recent grad, I agree with a lot what you have to say. However, you have to find a job you enjoy doing or you will become miserable. If half your waking hours are spent on something that does not align with your goals or getting you towards them, resentment will leak out towards other aspects of your life.
.-= Nick´s last blog ..Trading Structured Finance Instruments Part I: An Introduction to Structured Finance =-.

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