I graduated college in 2010 and landed my first full time job about two months after graduation. Even at an entry level salary I thought I had “made it” but that ideology only lasted about a year until I realized that I needed to do more in the personal finance department. With that said, I still found a way to dig my student debt hole a little deeper when the little nerd that lives inside me decided she wanted to go back to school to earn a Master’s degree. So fast forward to about three and a half years after getting my Bachelor’s degree I also had a Master’s degree and a job where I had been promoted twice and my salary had almost doubled. Yet, I still felt that my personal finance world was in need of some help.
Here was my situation: I had student loan debt that equaled my annual salary, I had a car loan that was about a third of my annual salary and I did not (and still don’t) have any credit card debt. I was fortunate enough to have parents that allowed me to move back home after college in order to focus on paying down my student loan debt. Also, here is an interesting fact, my monthly student loan payments equaled my parent’s monthly mortgage payments. YES, you read that correctly! Anyhow, I wish I knew some of the things I know now when I was a recent graduate.
Save, save, save
I wish I had gotten into the habit to save a percentage of each and every paycheck into a separate savings account. I now save 20% of each paycheck and I cannot tell you the difference that has made in terms of building a healthy emergency fund. Also, I recommend keeping this savings account in a bank separate from the one you use on a day to day basis.
I did not contribute to my 401k for the first nine months of my first full time job and whenever I think back to that I kick myself! I know you have heard this advice over and over but it contributing to your 401k (or other retirement plan) is extremely important and the sooner you begin your contributions the better. And if your company has a matching program please, please take advantage of it.
As a rookie full time employee with an entry level salary that seemed like a whole lot of money I definitely overspent on shopping for clothes, shoes, handbags and so on. I recently went through a closet detox where I felt like I was literally throwing cash money into trash bags! Side note: the clothes were donated. Now I think of quality over quantity and not only that but I also only buy clothing if there is either a promotion going on or if it is on sale. I worked at Banana Republic for 5 years so I know it is not worth it to pay full price for clothing.
Use credit cards wisely
I have one credit card, that’s it and I use it on a regular basis but I do not, I repeat, do not carry a balance on it. At one point a few years ago I had a balance of $600 and you all may laugh at me but I could hardly sleep at night knowing that I had an outstanding balance – I paid those 600 bucks as soon as I could and vowed to myself to not carry any credit card debt anymore. I believe the point of a credit card is to help you build your credit and not to use it to buy items with money you do not have. While it is tempting buy new and shiny items, it is not worth it.
What have you learned about money after college? What are some things you know now that you wish you knew then?