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5 Money Lessons Every College Grad Should Know


In the words of Ms. Carrie Bradshaw, “I like my money where I can see it—hanging in my closet.”

Oh… don’t we all Carrie, don’t we all… but as graduettes, there comes a time where we must put on our big girl pants and learn to take care of business. With real world jobs and responsibilities comes the grown-up stuff we wish we didn’t have to worry about—including taking control of our finances. Sure, the “b” word (“budgeting”) has crossed our mind a few times, but it always seems so difficult and tedious, and something that should be happening in the future. If you’re like most twentysomethings you may not even know where to start, let alone successfully manage your finances. Fortunately, we’ve got you covered with these five money lessons.

1. Close your account at “Bank of Mom and Dad”

During college, many of you weren’t able to completely support yourselves. Whether you had an entire expense account to blow, or had grocery money tossed to you every now and then, it was nice having parents who loved you, cared about you, and supported you… even when you were away at college. However, becoming dependent on this safety net is often what keeps many collegiettes, and graduettes, from being able to succeed and thrive financially on their own.

Utilizing your parent’s resources every once and a while when the going gets tough is okay, but if you find that you’re consistently short on rent, bills, or in a perpetual state of “broke and fabulous,” you may want to reconsider how you are managing your money. By slowly weaning yourself off the financial cushion provided by your parents, you’ll gain the ability to become an independent and responsible adult.

Rather than relying on your parent's financial account entirely, try using them as a source of financial advice and knowledge. Find out how they saved in the past, what mistakes they may have made, and what you can do to assure you can have a financially stable future.

2. Start saving RIGHT. NOW.

One of the hardest lifestyle changes that take place in your twenties is learning that saving is not only smart, but necessary, when learning to manage your money correctly. As new members of the “Real World Club” with a new job, salary, and apartment, we find ourselves in a constant state of movement—and always seem to be reaching for more instant gratification. It’s difficult to save and put money away for later years, especially when we really want that new cherry red convertible, wardrobe, or even something as small as the designer bag you saw at the mall the other day.

We get it; saving money is HARD. In the past, working menial jobs throughout college with such little income made it hard just to afford Taco Tuesday night. Yet now, with a degree and full-time job, there’s no more room for excuses.

As we enter our after-college lives, the concept of saving is something we often put off. We think, “I’ll start next year,” or “after this paycheck” or the next… or the next… But the longer you wait, the more we’ll regret it in the future. As painful as it is to save now, it’ll be even more painful to look back ten years later and wish you started today. We’re not only talking about saving for a rainy day… we’re talking about the big picture.

According to Carrie Schwab-Pomerantz, President of Charles Schwab Foundation, “The sooner you start saving and investing, the easier it is on your budget… the sooner you start the less you have to save because you have time on your side.”

In other words, the money you save and invest today will be worth so much more 10, 20, and 30 years from now thanks to compounding interest; no matter how little the amount may initially seem. On the other hand, if you wait to start saving 10 or 20 years down the road, the money saved will have less time to gain interest, meaning you’ll ultimately end up with less, even if you're saving more each month. Experts from Forbes.com suggest saving at least ten percent of your income annually in your 20s in order to properly prepare for retirement.

Sure, it would be nice to actually spend our entire hard-earned paycheck month after month, but in reality, what you come to learn in your twenties is that saving may not be as overrated as it seems. So take our advice. Start saving. Start early. Start now. 

3. What in the world is a credit score? And how can I get one?

In college, we were taught everything from political theories to chemical formulas—most of which we’ll never use again. Through all the lectures and exams, you’d think we’d have at least learn more about this whole credit score thing.

According to Investopedia.com, a credit score is defined as a number that reflects an individual’s '"credit worthiness” and is used by financial lenders and institutions in order to see how likely a person is to pay back his or her debt. This number is calculated to be anywhere from 300 to 850. The higher the number, the better the score.

As you may know, a bad credit score can keep you from doing a lot of great things in life such as buying a car or a house. Without a good credit score, lenders have a hard time trusting you enough to lend you money, or to let you open a credit account. So if you need good credit in order to even get approved to start building good credit, how in the world are you ever supposed to start in the first place? Fortunately, you’re not the first to ask this question, and there are a lot of experts and resources that can help you answer this and many others.

A great place to begin is at your local bank. Speak with an advisor about opening your first line of credit. Every card is different, so be sure you know the benefits and drawbacks (for example, whether there are any fees, and what the interest rates are), and what you need to do to get approved.  If you’re unable to get approved on your own, you may be able to work out other options.

Try looking into a credit card that specifically caters to college students or recent grads, such as Discover It or Capital One’s Journey Student Credit Card. These cards often offer perks and benefits that are specifically helpful for twenty-somethings. These perks can include point redemption on items you spend the most on such as gas or restaurants. This can be particularly helpful for building credit because many find it helpful to use these cards specifically for the rewards categories only. If you’re worried about falling into debt, or overusing your card, try using a card with gas rewards exclusively at gas stations. This can also help for budgeting purposes as you’ll be able to see exactly how much you spend on gas each and every month. Just be sure to only spend what you can pay back. Pay regularly, pay on time, and you’ll be on the right track. Be sure to do your research and you’ll be one step closer to a better credit score in no time.

4. Organize, budget, and take control

Figuring out things such as income, bills, expenses, and taxes can all seem pretty overwhelming at first. Where do you even start? Whether you have one bank account or two, two lines of credit or six, what’s important is that you are able to organize everything into one place. Mint is a great app that not only helps you organize your finances, but budget and take control of them as well. With Mint, you’re able to see all your accounts in one place; you'll see how much money is coming in and how much is going out, so it's easy to get a glance at what you're spending on. At the end of each period, you are able to see a snapshot of your overall wealth and debt. Additionally, Mint will give you a free credit score every month provided by Equifax. Although there may be multiple methods of managing this information, the important part is that you find a method that works for you and that you are able to stick with it.

Start by penciling out a plan. A standard way many people go about organizing finances is giving “every dollar a job.” As we talked about earlier, you’ll need to start saving for retirement and your “rainy day emergency fund” as soon as you start having income. That gives at least 15 to 20 percent of your income the job of providing security.

Next, you’ll need to budget expenses. This includes everything from rent, utilities, food, car payments, student loan payments, and other bills. While this will typically vary for each individual, be sure that you adjust your budget and planning to your own needs. Although you may have been able to afford going to dinner and a movie every weekend while living at home, now that you’re in the real world, lifestyle changes may need to be made in order to live within your means and for you to achieve your financial goals.

5. Differentiate between wants and needs

Understanding the difference between wants and needs may seem pretty basic, but believe it or not, this is probably one of the most difficult lessons we have to learn in our twenties. Self-indulgence and self-control are at a constant battle in the real world. It’s almost as if each and every item just shouts at you saying, “HEY! You deserve me! You need me!” #thestruggle. But as much as you think you need a new dress for your hot date this weekend, in reality, it wouldn’t kill you to just wear your go-to LBD.

On the other hand, legitimate needs such as doctor appointments and car maintenance often tend to get put on the back burner because they are such large expenses, and putting down that much at once might feel excessive, no matter how necessary. At the end of day, as much as you may hate to admit it, these are the actual needs that your income should be spent on. Sure, it’s okay to treat yourself from time to time, but there’s a big difference between buying a nice new pair of shoes that make you look like a million bucks and buying a pair of shoes that cost nearly a million bucks. Just like anything else, moderation is key.

Agreed, we all need to treat ourselves from time to time whether it be dinner with friends, or a mani-pedi just to relax for a bit, but be sure that these “needs” still correlate and are added within your budget. If you feel there is something you just can’t live without, be sure you know that while your money is going towards one thing, it is being taken from another. If you stick to your budget and savings plan you’ll see that in order to get what you want, you need to make sacrifices. If that means taking a trip to the secondhand store for work clothes, or seeing a early matinee movie instead, that’s okay. It may seem difficult now, but if you gain a grasp of it all now, it’ll be that much easier to achieve your financial goals in the future.

Managing your finances after graduation can be quite a struggle but just like anything else, these things take time and patience. It won’t be easy at first, and there may be a lot of trial and error, but if you start now you’ll be thanking yourself years down the line. Do your research, spend wisely, and stay organized; you’ll have your finances under control in no time.

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