New GraduatesCredit: By Kit from Pittsburgh, USA (Grads Absorb the News) [CC-BY-2.0 (], via Wikimedia CommonsCredit: By Kit from Pittsburgh, USA (Grads Absorb the News) [CC-BY-2.0 (], via Wikimedia Commons

Although I received a finance degree in college, looking back, there are a number of things that I wish I would have learned about personal finance during that time in my life.  I was very fortunate to come out of school with no student loans, and the job market was still strong at the time (this was the end of 2005).  I had accepted an offer before graduation, and was in pretty good shape.  That said, I still had a lot to learn, and the few years after graduation proved to be just as, if not more, educational than my time in school.  Here are some things to consider as you begin to prepare yourself for the real world.

1)   Live within your means.  I had a pretty good starting salary in my new job, and it was the first time in my life that I was making more than just some extra change for the weekend.  Problem was, I spent most of it.  Sure, I probably spent a little more on the weekends than I should have, and my love of good food, wine and beer certainly didn’t help, but the biggest issue for me was my living arrangement.  I chose to live by myself instead of getting a roommate (which I don’t regret), but the apartment I chose was way too expensive for what I was making.  I of course ran the numbers before signing the lease, but convinced myself that it was justified.  I lived in the building for two years, and as a result, didn’t start building my savings as aggressively until later. 

2)  Start saving for retirement!  Now!  While I may not have started putting away rainy day funds until a little later than I would have liked, one thing I immediately did was start taking advantage of my employers 401k plan.  I was not eligible to participate until a few months after my employment began, but I started contributing as soon as possible.  My company has a great plan, and matches 100% of my contribution up to a certain percentage of my annual salary.  It is a great deal.  Many companies offer a similar match, and it is ludicrous not to take advantage of it.  It is essentially free money.  In my case, I am making a 100% return on my investment before I even factor in what are hopefully gains in the market.  Shockingly, I heard a statistic that only 50% of the people at my company utilize the 401k, and of that number only 50% utilize the full match amount.  I won’t post one of those time value of money comparisons that you have probably all seen, but the amount of money being left on the table over a 20 to 30 year period is painful to think about.

3)  Do your own homework.  Within the first month of starting my job out of college, I was called by a couple of financial advisors, trying to sell me annuities, life insurance, financial planning services, and a number of other things I didn’t really need at the time.  Having studied finance in school, I was familiar with those types of products, however many new graduates likely are not, nor do they need to be at that time in their lives.  When you are young, unwed, and mortgage free, you do not need to jump into products like that.  At least not right away.  Take some time to do homework on your own, and put together a financial framework for where you want to be in both your short term and long term financial future.  As mentioned above, the first thing you want to do is start socking away some rainy day money in case you encounter a situation in which you cannot (or perhaps don’t want to) work for a period of time.  After that start thinking about your retirement funding, and perhaps open a brokerage account in case you want to begin investing with funds that are completely liquid before you hit retirement age.  Investing in stocks outside of an IRA/401k is not for everyone, but it can be incredibly rewarding and will require you to do much of the legwork on your own, providing you with a great (though at times costly) education.

Looking back on the early years of my professional life, there are a number of things that I wish I knew when I graduated college.  Following the above steps will give you a great start as you begin to plan your financial future!