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Salt Lake City Bookkeeping Blog

Financial Advice For New College Grads

Posted by Matt Roberge on Apr 3, 2013 7:00:00 AM

I graduated from a small business college nearly 12 years ago.  A lot has changed since then but one thing that has certainly changed is my way of thinking.  While your parents offer lots of advice throughout your life, they particularly seem to offer it around your college years.  However, the typical college student at that point in their life doesn't necessarily love to listen to their parents' advice.  Looking back now not only do I wish I had listened to the advice given to me, I wish I had asked more questions.  Here is my advice for upcoming college grads.  


Find a job don't look for a job

Have you ever heard someone say "the best jobs aren't advertised."  There is quite a bit of truth in that.  If you think you are going to find your dream job listed on the internet or newspaper, keep dreaming.  Quite often it is true that the best jobs are not advertised.  So how do you find them?  Find a company, small business or person that is your ideal employer.  Find out everything you can about them.  Next, network your way to a decision maker.  Make a compelling presentation.  As a small business owner there are plenty of positions that I would hire someone for right now.  Some positions I have a job description for and others I guarantee you I don't.  Maybe I just need to hear someone present what type of job I need to hire them for.  Quite often your dream job needs to be created; find a way to do that.  

Don't hesitate on your ideas

I hear a lot of great ideas from people and then guess what happens?  Nothing.  People have genuinely great ideas but never act on them, why?  I'm not sure but I would guess it would be a fear of failure.  I also think that many people feel that you need a lot of money to act on a product or business idea.  The fact is that many startups will tell you that they prefer not to have any money in the beginning phases because it forces them to make better long-term decisions.  

I also feel like many people have great business ideas or just a burning desire to start their own business.  Once again for many people it just never happens.  Instead you hear a lot of excuses about things getting in the way like jobs, family etc.  Not that any of those "excuses" are bad things at all.  My point is act on your product and business ideas early before you regret it and come up with a list of excuses as to why you can't act.  

Live in percentages

This is a huge golden rule for me and a concept that I feel very strongly about.  From a financial standpoint I live my life through percentages.  A certain percentage of my income goes to categories like shelter (mortgage), food and living expenses, retirement, transportation and meals & entertainment.  If you establish a percentage of 100 that is dedicated to each category of life that you spend your money on and stick to it you will have a successful life.  I also want to stress that it is extremely important to have a percentage that goes to entertainment.  Let's say you love to ski, go out to eat or travel, it is extremely important to feed that passion.  The problem with many people is that they spend too much money entertaining themselves and it ends up taking away from other categories like housing and retirement.  A lack of planning and financial discipline is what keeps many people from buying a house or retiring.  People are real good at coming up with reasons as to why these life events don't happen for them and it never has anything to do with them.  The reality is that it is their fault.  The key to living in percentages is to establish your financial percentages plan early in life and stick to it as your income increases.  That way you are always living with a plan and on a budget.  

Top 3 priorities after graduation

If I had to pick three top priorities for a recent college grad they would be:

  • Find a good paying job that you enjoy
  • Pay off all of your debt as quickly as possible
  • Save for a 20% down payment on a house
That is it and in that order.  Not that you shouldn't be doing other things but this is what I would focus on.  Here is my reasoning.  You have to find a good paying that you enjoy so that you can carry out the rest of your financial plan.  You then need to pay off ALL of your debt as quickly as possible because interest bearing debt is bad.  In fact I only recommend paying interest on two items in your life: a house purchase and your education.  Lastly, after you have your debt paid off your main priority should be to save for a 20% down payment on a house.  A home purchase is one of the most important things you will do in your life and you should do it right.  That is with 20% down and at least 6 months of full living expenses in the bank.

Learn how to network effectively

Learning how to network effectively will prove to be incredibly valuable as both your life and career progress.  In reality you have been building your network throughout your life.  You have chosen your friends and you have kept in touch with certain professors.  A strong network will become increasingly important as your career progresses.  Networking is not easy and to be honest many business people just plain suck at it.  With technology and social media, networking is changing as well.  Joining virtual groups such as Inbound Networkers will teach you not only about networking but inbound marketing as well.  Learning the importance of websites such as LinkedIn and how to use LinkedIn effectively will help build a strong network.  I am by no means an expert networker but I can tell you a few things I have learned:

  • Attend every networking event with the mindset of giving not taking.
  • Ask a lot of questions to people that you talk with and ask about their business.  Then think of ways that you can help them by referring them potential customers or connections. 
  • Follow up with people that you had good conversations with.

Don't ever buy a new car  

Don't ever buy a new car; just don't do it.  This is a huge pet peeve of mine.  I hate new cars for a couple of reasons:

  • They are a depreciating asset
  • They lose value quickly

Fight the urge to purchase a new vehicle at all times throughout your life.  If you do buy a new car I have two rules: either get 0% financing or pay cash.  I often see people get a raise or fall into some unexpected money and their first instinct is to buy a car...so dumb.  Go back to the section on living in percentages and rethink your new found money. 

Start contributing to retirement yesterday

Most college grads will learn the value of contributing to their retirement early, but very few of them will actually do it.  Ideally you would have started contributing to a retirement plan before you even attended college.  By starting to make retirement contributions early you are creating good financial habits.  You should treat your retirement contributions as a mandatory bill not as an optional contribution.  You read stories all the time of how few people can actually retire.  It's becoming more and more rare to actually retire.  It takes strong financial discipline to contribute to your retirement month after month.  Lastly, if your employer offers a match to your retirement contributions in any percentage you would be a fool not to take advantage of that.   

Insurance is very important

It is crazy how important insurance will become in your life.  At this point you are probably familiar with auto insurance and health insurance.  However as you get older the various types of insurance like life, health, disability, personal umbrella, car, home insurance etc. can get confusing.  There are a lot of different types of insurance that you will need and many of them are very important.  Insurance is one of those areas where you can spend a ton of money.  Finding an insurance professional that you can trust is as important as finding a good accountant and lawyer.  Here is my advice on insurance: protect yourself against life changing events.  You don't want to have a major medical catastrophe without good health insurance, as that is a life changing event you may never recover from.  You also don't want to get in an accident in your car, kill someone and then lose your house, savings and everything else you have worked your entire life for.  Believe me you want to find an insurance agent that you can trust.

12 years ago I graduated from college.  If I had read this article then I probably would have laughed at it and gone back to sipping cold beer.  I wish I had found advice like this and actually taken it.

Post College Grads: If you were graduating from college tomorrow what would you do differently knowing what you know now?

Pre College Grads:  What is your biggest concern after graduation?   What scares you?  What are you most unsure about?

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Topics: Personal Bookkeeping, Business Ideas, Financial Advice, College Grad