On the bright side, I had an apartment—but no way to pay rent once I ran through the graduation gift checks.
I’m sure that many well-meaning real grown-ups gave me advice about how I should get my financial feet under me, but of course it was difficult to pay attention. I did eventually get all of my ducks in a row, but not as quickly or as easily as I could have.
Now that I’m a real grown-up myself, I’ll impart the wisdom I wish I had internalized as a 22-year-old.
If You Don’t Have a Job Lined Up
Unfortunately, this is the case for a number of new graduates. Having lived through it myself, I know just how scary it can be. The important thing to remember is that unemployment is temporary. However, bad financial decisions can last a lot longer.
Don’t give in to the temptation to indulge in retail therapy to help feel better about a bad situation. When you’ve got no money, it can be really easy to treat your credit card as a magic source of free funds, but it’s ultimately going to bite you.
If you don’t have a job lined up yet, try to get as much of the rest of your life in order as possible while you focus your energy on your job search. That might mean living at home again or taking an interim job while you search for something within your field.
To get through this time, just remember that This Too Shall Pass. Embroider it on a pillow if you have to.
If You’re Working That Interim Job
My first job out of college was working for a bookstore for only a few dollars above minimum wage. It was certainly not where I saw myself once I had my degree, but it kept a roof over my head and kibble in the cat’s bowl.
The best thing I did with that job, however, was learn how to save even on a meager amount. I opened a savings account and transferred $15 a week over to it and never touched that money while I worked as a retail wage slave.
The takeaway is that no matter what McJob you might have to take, there is still an opportunity to create a strong financial future for yourself. Giving up that $15 per week taught me how to budget and go without when my finances were already strained.
I was never prouder than when my savings account hit $1,000—my first savings goal.
Another important lesson is that you never know how your interim job might positively affect your career. When I later trained to become a teacher, my experience in shelving books in every corner of the bookstore helped me to score very well on the Praxis literature exam for English teachers—without studying.
If You’re Launching Your Career
It’s very easy to feel safe, secure and a little smug if you’re trading graduation robes for a business suit, and you should certainly congratulate yourself. But don’t let the sense of security lull you into making poor financial decisions.
Even if you’re making great money, it’s extremely important to budget, save, and invest for retirement.
Budgeting when you’re young and don’t have to worry about children, health care issues, a mortgage or marriage will help you to maintain your lifestyle as you do start collecting those worries. But getting used to blowing all of your paycheck on fun will be impossible to sustain as life becomes more complicated.
Saving is what you should do with much of that extra money you don’t have budgeted for needs. The sad fact is that many companies follow the “last in first out” formula for layoffs, so your job is not necessarily secure. Pay yourself by building up an emergency savings account for rainy days.
Finally, investing for retirement is probably the most important financial decision you will make as a new graduate. It’s very easy to feel like retirement is too far away to worry about, but the magic of compound interest means that every dime you invest as a young twenty-something will be worth so much more than dollars (and twenties!) you invest later in your life.
If all you do is invest in your employer’s 401(k), make sure you take advantage of any fund-matching program available—to do otherwise is like turning down free money.
If You Have Student Loans
Most student loan programs offer a six-month grace period after graduation before the first payment is due. Don’t forget about your loans during this grace period. This is a good time to investigate loan consolidation and figure out how to budget your salary to fit the loans.
The thing to remember about student loans is that the penalties from missing a payment are pretty steep—it can affect your credit score, keep you from being offered a federal job, and cause your interest to go up.
However, student loans are unlike any other type of credit in that you can postpone payment in a number of ways if you find yourself embarrassed of funds. The bottom line with student loans is that you must keep them informed if you’re having trouble making your payments.
As long as you’re giving the old school try to pay, they will happily work with you.
Photo by ralph and jenny