My favorite movie was unexpectedly on TV last night! I was flipping through the channels and all of a sudden I stumbled onto Back to the Future starring Michael J. Fox. As I tuned in Marty McFly was jumping into the DeLorean and heading back in time to help himself by helping his parents. Watching that movie got me thinking about time travel. What time in my life would I re-visit and try to change?
There are so many. Perhaps my painfully awkward first kiss? Or that time I backed into my friend’s Lindsey’s mailbox and drove off without telling her? Or when I turned down a great job opportunity at a big firm to take another job making more money that I ended up hating?
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I can think of so many times I’d like to revisit but ultimately all of those things wouldn’t change my current life that much. Not as much as going back in time to give myself some financial advice would. There is so much I would love to tell my 20 something self, especially around the time I graduated from college.
There are so many things I would have done differently back then that would have put me in an ideal financial position. I wrote out a list of all the money moves I wish I would have made in the first few years after graduating college.
So with graduation season upon us I thought this might be good to share. It may not apply to you directly. Though this is great advice you can share with a son, daughter, grandchild, niece, or nephew getting ready to take the plunge into the “real world”.
Money move #1: Not buying a new car as soon as I got my first job. As soon as I got a few paychecks under my belt from my first job I rushed out and bought a new car. I was embarrassed driving my 10 year old car to the office. I wanted to fit in with my much wealthier co-workers so I went out and bought a brand new car.
In hindsight this was not the best financial move I could have made back then. I bought a new car for the wrong reasons and at the wrong time. I wish I would have kept my expenses low instead of adding to them with a car payment. There are a million things you want to buy and do at that age so keeping a car that’s got a few extra miles on it is actually a good idea.
If you must buy a new car look for a gently used vehicle, one that’s two to three years old with around 30,000 miles on it.
Money move #2: Waiting to start a 401(k). I really regret this one. I waited until my second job out of college before finally opening a retirement account with my employer. I just didn’t think I could afford to sock away any money at my first job. I wish I would have listened to my Dad and opened one up as soon as I could. Almost all employers match your contributions up to a certain percentage amount. I didn’t understand that their match was free money. Plus I shaved off two years of allowing compounding interest to work its magic on my retirement funds.
I encourage every recent grad that gets their first job to open up a 401(k) as soon as the waiting period is over. You can start out just contributing enough to get the full employer match but the ideal amount is 20% of your income.
Money move #3: Choosing my first job with more care. When I graduated from college I must have sent out a hundred resumes. I wanted a job so badly. I took the first job that was offered to me. I didn’t think about what job would fit me better or help me move up the ladder.
In retrospect I would have evaluated my choices better. Sometimes a lower paying job in your desired field is a better deal in the long run than a higher paying job in a field you won’t be in long-term. These types of jobs can end up delaying your career progress or trap you in a field of work that doesn’t make you happy.
Have You Received Your Code Yet?
To most people, this series of numbers and letters mean absolutely nothing. They go on using it daily without truly using it to its full potential.
But if you follow just a few simple instructions… you could cash in as little as a few minutes a day.
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Money move #4: Make plans for student debt. In 2010 the average college student had accumulated $25,000 in student loan debt by graduation day. The standard student loan requires graduates to begin paying back their loans within six months of graduation. In the current job market, it may take longer than that to find steady employment.
The worst thing you could do is ignore the letters saying it’s time to begin repaying your student loans. They are not going to magically disappear, even if you file for bankruptcy. Instead make a plan to pay back your loans. Look at income based repayment plans. Under this program, your loan payments will be kept to 15 percent or less of your disposable income. Another affordable option is a graduated repayment plan in which your monthly payments increase over time in line with your salary.
If you haven’t found employment within six months of graduating look into unemployment deferment. In this option you can postpone making loan repayments until you find a job.
Money move #5: Not socking away money regularly in my savings account. Recent graduates all feel like they have barely enough money to live on and can’t put any money aside for a rainy day. I sure felt that way. But all financial experts agree that this is exactly the time to get into the habit of putting money into a saving account.
Even if it’s just $20 a month; set up an automatic transfer from your checking account to your saving account. It’s important to start an emergency fund and sock away money for those extras like vacations and unexpected repairs.
Money move #6: Don’t blow your graduation cash. This is one of the few times in your life where people will send you wads of cash. Depending on how many announcements you send out and your family you could acquire a sizeable amount of money. I don’t remember how much I got when I graduated but I know it was at least a couple hundred dollars. I know I blew a lot of that money on new clothes and going out.
The prudent thing to do would have been to put it into my savings account or use it to pay off any debt. At this point in any recent graduates life they are bound to have a lot of upcoming expenses like coming up with first, last and security deposits for an apartment, furnishing that apartment, and buying work related clothing. Having money set aside would help pay for all of these expenses.
If you have a young grad in your life I hope you share with them your best and worst financial moves. The younger we can get these kids to start developing good financial habits the better off this country will be.
How to Get FREE Gas Forever
Free Gas may not sound like it’s going to change your life, but this is just a small sample of the sort of know-how I’d like to let you in on here.
If everything was free you could retire now, right?
Or to look at it another way, saving money makes you wealthier! As long as your lifestyle doesn’t suffer in the process… Changing the lens through which you view things can change everything.
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Keeping Money in your Pocket,