Class of 2014: Here Are 4 Tips for Acing Real-World Finances

×
Smiling graduate holding diploma
Tom Merton/Getty Images
Congratulations! You have just become a college graduate. This is an exciting -- and maybe scary -- time. You're probably looking to start a career, earn your first significant paycheck, take your serious relationship to the next level, find a new place to live, and accomplish a lot more fun stuff.

But you might also be staring down the barrel of a lot of heavy financial issues: paying down student loan debt, saving up for those big life changes, figuring out how to manage your own finances, and determining how soon you'll need to start thinking about retirement. (Spoiler alert: now.)

Don't worry. I'm going to give you four tips to financial success that will make it all a lot simpler.

1. These Are Your Financial Priorities

You have a lot going on right now. The best thing to do is take a deep breath, relax and plan. Start by determining your financial priorities. Most people will want to focus on the following (in order of importance): Wait, we're already talking about retirement? You bet.

2. Save What You Can for Retirement and Future Needs


If you're earning an income from a full-time job, it's time to start contributing to your retirement accounts, and investing some of your savings. It's never too early to start making progress in this area, because time is your biggest advantage as an investor.

The earlier you start, the more your nest egg will eventually be worth -- even if you don't feel like you're saving much. The secret is compound growth -- something so potent that when people claim Einsten called it one of the the most powerful forces in the universe, folks believe it. (Whether he said it or not is debatable. Its capacity to seriously buff up your retirement nest egg is not. )

Even if it's just $50 or $100 a month right now, contribute what you can to your retirement and major savings accounts that will help you cover future needs and expenses. And then don't touch it.

Make this easier on yourself by taking advantage of "free money" opportunities where you can. Your company benefits package is an excellent place to start.

3. Live Frugally to Aggressively Pay Down Debt

Learn this lesson as soon as possible: Material stuff doesn't make you any more of a person. Possessions are unlikely to make you genuinely happy and fulfilled. So stop wasting your money by trying to accumulate things, things, and even more things.

Instead, make sure your spending is in line with your priorities and your values. You worked hard for your money, so be mindful of what you purchase with it. Embrace living frugally -- which doesn't mean living cheap.

Being frugal means you're more resourceful and less wasteful. It means you're not pressured into buying things you don't need -- or maybe don't even want -- by your peers, family members or a society that encourages mass consumerism.

Once you've realized you don't have to spend every cent you make on stuff that you don't really value, you should have money to allocate toward your debt. Get aggressive with your loan or credit card balance payments.

The sooner these big debts are gone, the sooner you'll be more financially stable and secure. The longer you hang on to debt, the longer you'll be unable to advance other financial goals and the more money you'll be paying in interest.

4. Establish a Side Hustle


Feel like there's not enough money to go around each month to cover all your financial goals, expenses and wants? You do have the power to solve this problem. It's called a side hustle. Any kind of part-time work you can do on the side will accelerate your progress as you repay debt, save for the future and acquire the money you need to make big things happen in your newly independent, real-world adult life.

Sophia Bera is a financial planner for millennials and the founder of Gen Y Planning. You can sign up for the Gen Y Planning newsletter for more tips on millennials and money.

Increase your money and finance knowledge from home

Economics 101

Intro to economics. But fun.

View Course »

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

Add a Comment

*0 / 3000 Character Maximum

7 Comments

Filter by:
Valerie

I guess this writer believes every college graduate will easily find a good-paying job. However, in reality, recent college grads have one of the highest unemployment rates. A lot of them end up jobless and return home to live with Mom and Dad because their fresly-minted college diploma is not a magic passport to full-time employment.

It's a tough world out there. Hundreds of people competing for every available job opening. And employers know they can pick and choose, too.

This writer would have done better to write an article on ways to make yourself stand out from the big crowd of job hunters. Tips on "managing finances" are not much use to someone who doesn't have a job with livable wages.

May 13 2014 at 12:36 AM Report abuse +1 rate up rate down Reply
corey.bradley

The one tip...SAVE SAVE SAVE. I am over 40 now, and I really have realized that I do not have enough put away in retirement savings. I really wish I started saving earlier, but unfortunately now I have no choice but to put away money harder than ever. To do this I am making these changes:
1. Starting a small business that did not take much startup capital. It doesn't make a lot yet, but we are already capital positive and hopefully it will supplement my savings and maybe income during retirement.
2. I spent a lot of time watching Suzey Orman and Dave Ramsey. The biggest point I picked up on was that you NEED life insurance if you have a family, but you shouldn't waste money on it. I cashed in a policy that cost me $280 a month for one that is only $20 from LifeAnt that provides the same benefit. I save the difference just like they recommend in a Roth IRA account.
3.I put the maximum amount amount in my 401k that my employer will match. For me this is 5% for a 4% match. Experts recommend that you save at least 15% of your income every month. I am not sure that I am all the way there yet but I am getting closer.

May 12 2014 at 10:40 PM Report abuse rate up rate down Reply
alfredschrader

Acing your finances wont make you secure - didn't work for Steve Jobs.
Instead ace your life. Read Proverbs and follow it exactly and never worry again.

May 12 2014 at 6:47 PM Report abuse -4 rate up rate down Reply
alfredschrader

Read Proverbs in the Bible and do what it says exactly and never worry again.

May 12 2014 at 6:45 PM Report abuse -3 rate up rate down Reply
texastotenmom

college kids today will be $80.000 in debt n trade their grad caps with one of obamits jobs he created in the last 5 years now ,with a booger king cap n will learn the song.."hold the pickles..hold the lettuce..special sauces dont upset us. !!

May 12 2014 at 4:58 PM Report abuse -3 rate up rate down Reply
1 reply to texastotenmom's comment
jpfmtka

Two college grads so far (University of CA and CA. State) with one more to go, also University of CA. One in graduate medical school, another to follow. Not a dime of debt. Futures are the result of what you plan and work for, not the result of the government. Need to fix blame? Look in the mirror.

May 12 2014 at 5:55 PM Report abuse +4 rate up rate down Reply
jdykbpl45

Get a job.

May 12 2014 at 4:05 PM Report abuse +3 rate up rate down Reply
1 reply to jdykbpl45's comment
jpfmtka

Plenty of people have jobs but only the wise plan for a future of financial security. Let me guess, you are one of the former.

May 12 2014 at 4:27 PM Report abuse +3 rate up rate down Reply
1 reply to jpfmtka's comment
Valerie

The only way anyone is going to have a "financial future" in today's radically changed workplace is to save every dollar you can. Forget about acquiring massive debt by signing up for home mortgages and car/truck loans. Save and invest. Save like your life depends on it, because in the future, it probably will be just that way.

It is truly amazing how many people actually think they "can work until they are 70 years old". Good luck with that plan. Employers are currently firing workers as soon as they hit the 45-50 year old age range. Then, it is practically impossible for unemployed people in that age bracket to find another job that pays more than half of what they previously earned.

The new employment reality is finding yourself forcibly "retired" when you are 55. Your living expenses won't stop, but your steady job income will come to a screeching halt. Your many years of job experience will mean absolutely nothing. Employers prefer to hire much younger workers.

The new changed workplace realities mean that you had better develop multiple streams of income that are NOT dependent on a pay check from an employer.

Think I am wrong, about this?? Then, do some research and reading about what the current 15 million unemployed people in America are going thru. They are the canaries in the mine tunnel.

May 13 2014 at 9:54 AM Report abuse rate up rate down