To help you make 2009 your best year yet, YoungMoney.com and author, speaker and coach Bill Pratt have teamed up to bring you his latest release, The Graduate’s Guide to Life and Money, straight to your desktop. Bill has divided his book into 52 pieces, with one piece available each week on YoungMoney.com throughout 2009. If you don’t want to wait all year to read the whole book, we encourage you to visit www.thegraduatesguide.com to learn more about his book or to purchase your copy today.
Week 0: Before You Begin
Congratulations! You’ve graduated, and now you are finally on your own. The next question is, “What do I do now?” You’ve just had four years (give or take) of all night study sessions, (you know, the ones where you do everything but study), finals, parties and a diet consisting mostly of pizza. If you were one of the lucky ones whose parents paid your way, then let’s not forget about the free rent and college loans. That’s right; mom and dad no longer have to keep paying your room and board. Plus, if you borrowed money you get the added benefit of paying back your loans… with interest. Don’t worry, I’m not here to take away all of your fun. What I want to do is show you how to enjoy your new life without going broke.
It’s amazing that after taking so many required courses you weren’t ever really taught how to handle your finances. “What? I just spent $40,000 (possibly of mom & dad’s money) over the past four years to prepare for my future and I didn’t learn a thing about my own finances?”
Sadly, even if you were an economics, accounting, or finance major, most of the fundamentals were still left untaught. Apparently, it’s more important to know who the seventh president was than to know how to balance a checkbook. Well no offense to President Jackson, but the only way he is going to be able to help me with my finances is if I have a bunch of twenty dollar bills with his picture on them in my pocket.
You have already taken a financial step in the right direction by reading this book. If the book was a gift, then at least you opened it. Sadly, we don’t even realize how little we know until we have to start making smart financial decisions. For instance, an insurance agent might want you to buy a whole life variable annuity with a conversion clause. “It’s the greatest thing for your family. You do want to protect them don’t you?” Hello! What if you don’t even have a family yet?
Perhaps the car salesman has a great deal for you, “You can lease it and only pay for what you use. Your payments will be much lower.” Yeah, and best of all, you’ll have to do it again every three years for the rest of your life!
What I want to do in this book (or for our purposes… this article series) is show you all the things you need to know in order to make the best financial decisions without making any of the mistakes I did. Everything from finding a job and an apartment, to making the most of your 401(k) will be covered here. All you have to do is follow along, and maybe do a few assignments (try not to think of them as homework, but rather as… well… learning exercises).|
I’ve tried to lay this information out in a very logical order. Some of my comments were written under the assumption that you have (or are about to be) graduated from college. However, if you are a high school graduate and are going directly into the workforce, or you are just somebody under the age of thirty-five, then all of the principles are just as relevant.
First of all, if you had to move back in with mom and dad, don’t feel bad. It’s happened to the best of us. I, too, had to move back in with my parents for about six months. With housing and rental prices out of reach in some areas, moving back home for a while is becoming a more common phenomenon. In my case, I was having trouble finding a job.
Just remember, your goal is to move out of your parents’ house as quickly as possible, without ruining yourself financially. I think I speak for most of us when I say “as quickly as possible.” It’s really hard, after four years of social freedom, to suddenly move back in with the folks. A word of advice though, if you do move back in with them, remember, it is their house and they are doing you a favor. Respect that and things will go much smoother.
I want to emphasize the phrase “without ruining yourself financially,” because there are a few fundamental points that must be made.
• Your parents have more money than you
• Your parents are smarter than you (just in case my parents read this)
• Your parents have been working for more than 20 years
• Your parents have been accumulating stuff for more than 20 years
• Rent is not cheap
• Paying your own bills stinks
• Your whole paycheck is no longer “play” money
I will discuss each of these points in more detail later in the book (or for these purposes: article series). For now, let’s talk about what to do if you are living at home. You have to understand that, as much as your parents love you, there is a factor of inconvenience. No, I don’t mean for you (although that may be true). I mean for them. Having an extra person in the home is an added stress, and it forces your parents to make changes to accommodate the extra resident. That is one reason you should plan to move out in less than one year.
Also, don’t spend every dollar of your paycheck like you did when you were in college. If you found a job then you are probably making more money now. Take advantage of this opportunity to save your money. Trust me, once you are out on your own, there will be few opportunities to save like that again. Besides, the quicker you save money, the sooner you will be able to afford your own place.
The first part is going to help you cover the basics. We are going to look at searching for a job, writing a resume, and impressing people at the interview. Some people have great personalities and do well in interviews, but they lack in their writing skills. Others can write an incredible resume, but have bad interviewing skills. Both of these skills must be combined in order to get the job you want. You also have to know what you want from your job. We’ll talk about that when we discuss the job search.
The second section is designed to help you with money basics – all those things taken for granted, such as where you do your banking; how to write a check; and what all those numbers on your pay stub mean.
You’ll also learn how to set up a reasonable spending plan and use your money wisely. Don’t worry; I am not talking about a strict budget where every dollar has to be tracked. I’m talking about knowing your money habits, so you can have more freedom to spend without the worry.
The third section will help you find an apartment, or even buy a house. But there’s more to your apartment than just paying rent. I’ll go over a few “tricks” to help you save time and money by doing some things yourself. I’ll also offer some especially helpful hints for once you own your own home. If you need one, you’ll also learn the ins and outs of buying or leasing a car.
In section four, we talk about how money actually works. That’s right, we’ll knock out those college loans and credit card balances in no time. As we discuss retirement and investments, you’ll learn how to make your money work hard for you. You will also learn about insurance and what you do and don’t need. Not to be left out, we’ll delve into the ever-dreaded topic of taxes.
The final section emphasizes personal finances. We’ll go over a few things life will throw at you such as marriage and children. You’ll also gain a better understanding of the differences between men and women when it comes to money. I’m no relationship expert (just ask my wife), but if you go in knowing a few key differences about how you and your significant other communicate and how the two of you view money, you’ll be way ahead of the game.
I want to make this as easy as possible while still giving you the information you need to succeed in the real world. We all have great potential, and we can either squander that potential, or we can live life to its fullest. I want to give you the tools to excel in the world of personal finances without having to first dig your way out of a big hole. Basically, I plan to cover all the things they don’t teach you in school about real life and money.
Here is a quick look of the topics that will be covered:
- Nobody Majors in Unemployment, It Just Comes With Your Diploma
- Get Noticed, Get Hired, Get Paid!
- Ace the Interview
- The Best Ways to “Bank” Your Money
- What Happened to My Paycheck?
- Planning Life’s Road Trip
- Your First Apartment: Meals Not Included
- I Work, Therefore I Drive
- Home Sweet Home of Your Own
- Defeating Debt: Beat the Lenders at Their Own Game
- Save, Invest and Save Some More
- A Financial Peripheral: Insurance
- A Life Less Taxing
- Have it Your Way
- Just the Three of Us (How Money Affects Relationships)
- Ooh! Let Me See Your Ring
Bill Pratt is a former credit card executive turned student-advocate. He is the author of Extra Credit: The 7 Things Every College Student Needs to Know About Credit Debt & Ca$h and The Graduate’s Guide to Life and Money. Bill speaks at colleges to educate and entertain students about real-life issues in money, leadership and success. His goal is to help students succeed personally and financially so they can improve the lives of those around them. You can learn more at www.ExtraCreditBook.com or www.TheGraduatesGuide.com.