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Financial Advice Beyond the College Dormitory

July 20, 2018

Congratulations! You’ve earned your degree. Now what?

The transition from school to a career can be daunting. Benjamin Braddock (played by Dustin Hoffman) in the 1967 classic “The Graduate”, was a new college graduate who was given advice for the future in one word: “plastics”.

Quite frankly, plastics were the thing in the 60’s and in fact, it was the business my dad was in. So that advice to Ben Braddock hit home a little.

But that was then and this is now and the world is more complicated and things seem to move much faster. Today’s college graduates are sometimes so overwhelmed with information and technology that there may be difficulty in determining what is really important.

I was a college graduate that had to bridge the divide between merely being responsible for getting through college and the new challenges that came after. After experiencing my share of failures and having a few wins along the way, I can share a few observations about how a new graduate might increase their chances of successfully negotiating life after college.

  1. Social and business networking or "making new friends"
    It's time to meet new people. Being in a community and connecting with new people will go a long way in helping to ease the pressure and loneliness of your new environment. New friends not only allow for a robust social life, but these contacts may lead to new business opportunities.

  2. The dorm is no longer an option
    You may move back home, and if you do, it's only fair that you pay rent.

    Another though - You may have lived with roommates in college, so consider getting a roommate or two and rent your own place.

  3. Time to budget
    You may be earning more money than you've ever made. But your expenses will blossom, too. It's important to balance the inflow with the outflow of cash. Track you expenses and categorize them. Its important to know how you spend and on what you spend so you can create a realistic budget.

    The goal is money left at the end of the month, not month left at the end of the money.

  4. Manage your debt
    That brings us to the next topic - credit cards. They are a great convenience, but pay them off at the end of each month, period. The first time you are unable to pay off the card, STOP using it until the balance is zero. The continued action of trading things and memories for debt may not end well.

  5. Good debt and bad debt
    DEBT is a four letter word. Debt used to by an appreciating asset like a home may be OK. Debt invested in productive assets such as a rental property may actually be good debt. A reasonable outlay for a car is acceptable. Credit card debt is not good debt. Student loan debt can become an albatross event though they represent an investment in yourself.

  6. One thousand dollars saved is one thousand dollars earned
    Short term savings earmarked for a vacation, an emergency, or a down payment on a home will give you a sense of comfort and satisfaction.
    Although many of the big purchases we make in life are paid for as we use them (houses and autos, for example) through financing techniques, retirement generally needs to be pre-funded.

    Your budget needs to allocate pieces to long term savings and debt repayment as well as to purchasing things and experiences.

I hope you've found these observations helpful. Obviously, there is so much more that can be added, so I invite you to reach out to me or anyone on our Family Wealth Decisions Group team with any questions or concerns. Remember we are here to help.