The excitement of graduation has long passed. You’re in an apartment office about to take your first step into adult life. The ink on the lease hasn’t even dried and your mind begins to wander.
You’re imaging the housewarming party you’ll throw, buying that big screen TV that’s waiting in your Amazon cart and how you’ll decorate your place like those trendy apartments you incessantly pin on Pinterest. Then you realize…you have no money.
Welcome to the first year of life after college. This was the first of many fiscal realizations I’ve had since graduating. Over two years, I’ve learned a thing or two. I’m no financial expert, but I haven’t gone backrupt yet. For those new grads, here’s how I got my financial bearings.
Step one: find a job
Unless you invented a popular social network in college, chances are finding a job is your No. 1 priority after graduation. That’s easier said than done. But, without a job, no amount of financial advice can help. So, get searching! I gave myself six months to find my ideal job. After that, I’d search for and take whatever. Set your limit and stick to it. Don’t worry; sometimes dream jobs just take a bit longer to find.
Turn on autopilot
You already know you need a budget. Once you create it, how do you ensure you’re following it? Easy. Try setting up an account on Mint, Wesabe or You Need a Budget. Then, quit using cash. Yes, I said it: avoid cash.
Those websites will automatically update with your credit/debit transactions. You can see where and how you’re spending, with charts showing how good (or bad) you’re doing. Unless you like entering transactions manually, cash can’t do that.
Out of sight; not out of mind
Your budget is automated. Awesome. Now don’t forget about it! I schedule time each week to review my Mint account. It takes 10 minutes, but the insight shapes my spending for the month. Schedule a reminder on your phone. No excuses.
The savings struggle
Yeah, yeah, yeah…savings is important. I get it. However, if you’re barely making ends meet, advice to save 10% of each paycheck doesn’t help. I set a goal of saving 3% of every paycheck. It’s not much, but it’ll get your emergency fund started. Once you begin earning more or have a solid rainy day fund, focus on retirement. Here I also set a goal of 3%, which I’ll increase later this year (one of my 2012 resolutions).
Perhaps the most important realization is something I touched on earlier: you can’t have everything. In fact, that’s probably true for any stage of your career. So, enjoy young adulthood, save and work hard. Before you know it, you’ll make some of those fantasies a reality.
Chris -
I commend your courage in sharing your personal struggles … and for starting on the road to a secure future.
Small investments, given enough time, can really pile up. There’s nothing wrong with starting small. After all, the most important step — is well — the first one!
You mentioned your savings goals for an emergency fund and retirement. One tip we discovered decades ago was MAKE IT EASY. If you make it easy to save, you’re more likely to follow through with it.
We used payroll deduction from our paychecks to go into a 401(k) and something as simple as US Savings Bonds. We also used automatic debits from our checking account to fund IRAs and an emergency fund. Most mutual fund companies are more than happy to do this for you free of charge.
If the money isn’t in your account — you’re less likely to spend it.
Good luck on your savings journey!
Great advice Christopher! One of my children is going through that first step of finding the “dream job” right now, I keep encouraging her to not give up on her dream job and settle for “anything” but I realize you have to pay the bills! No matter what stage you’re in or your income level you will need savings to meet the emergencies (which will arise) – I agree with your advise to use a budget tool – I’d advise finding a bank or credit union that offers a free tool as part of their home banking offering which automatically tracks your spending and creates a budget based on your actual spending habits, such as Intuit’s product “Finance Works”. Your other thought to live within your means is solid advice; don’t make commitments that will become a burden. Thanks for sharing your thoughts!
I mentor underprivileged youth becoming 18; typically getting them set up & ready for college so they don’t fall through the cracks. I use a template from excel called “monthly expense budget”. It works well as you don’t have to be on the internet to use it & of course puts in perspective just how much they have income vs. expenses.
I find what you said about not having everything is a big thing for new money managers. I have to continuously remind them that they don’t need & can’t afford the latest gadgets & trends. I show them thrift stores & local FB classified ads for just about everything & anything. They end up with things similar to what they thought they needed & enough money to keep the lights on. Thanks for blogging!
Excellent advice, Christopher! I’m printing it off to show it to my daughter who recently moved into an apartment. She is a CNA working towards an RN degree. Her dream for her new apartment was also to purchase a new big screen TV and some new furniture. The reality was finding an older big screen TV and a nice couch along the street during a small town’s Gabby Days and dragging them home to her apartment. Thanks for sharing your story!
The biggest mistake most “newbies” make is to go into debt for those luxuries they had at mom & dad’s house and feel they deserve and need. DON’T ! It’s hard to learn the difference between a need and a want. Wants are what you pay for out of your surplus. When you’re just starting out, there usually is no surplus.
Even after 45 years, I get much nicer things than my surplus would allow for new by buying at yard sales and bargain shops, etc. Once you get it home it’s “used” anyway. You still enjoy it just as much.
Volunteering part time while looking for work can help with self esteem as well as sometimes lead to a paying job opportunity too. It can also lead to a lifetime passion that fulfills your non-work time. (Besides, it looks good on a resume!)
Great advice! Very well written, I look forward to reading more from you.
Thanks for your comments everyone!
Rita, I hope my advice proves to be helpful. I’m glad your daughter still managed to get the big screen TV, even if it was a bit older!
Linda, I liked your tip about volunteering as well. I’ve read a couple recent studies that show what little impact money has on happiness, and that giving back is actually far better for your well-being.