Even More Money Advice for Graduates

Another great comment was left on my post titled More Money Advice for Graduates and I thought it was worth repeating:

Michael Rubin, a financial planner and author, sent me his list of the top five mistakes made by new college graduates. I would also suggest not making the mistake of waiting too long to ask for financial advice. It’s always a good idea to speak to an experienced person first instead of thinking you can figure everything out on your own.

1. Overspending on a new apartment or car. Of course they feel rich when they bring home that first paycheck or count their graduation money, but can new grads really afford those expenses month after month — especially after taxes take their bite?

2. Celebrating all summer-long. A million pounds have lifted off their shoulders and the sun is shining bright, but racking up a bunch of new consumer and credit card debt isn’t the answer.

3. Attending graduate school to avoid the “real world.” Deferring those loans and taking out new ones may sound like a good idea, but if it’s not going to help a person in their field of choice, it could be an enormous waste of money — and time — and you can’t get either of them back.

4. Not signing up for a 401(k) plan right away. Compounding interest is a beautiful thing.

5. Not taking advantage of corporate benefits like health care and long-term disability insurance. You may feel young and healthy, but accidents happen. Don’t risk a lot for a little.

I'll admit to #1 and #4. But what did I know then? Not much, that's for sure.

That's why it's important for parents to teach their kids about handling money -- so these mistakes can be avoided.

Comments

[MRA]

I agree with 4 and 5, especially number 5 is important. Medical bills can be huge.

And I agree with the sub-text, quote:
That's why it's important for parents to teach their kids about handling money

Teach your children the real value of money and what the pitfalls of credit cards are.

You see more and more people having huge debts on credit cards, most of the time on items they can't afford. If you teach your children (through your own example) that it is ok to buy things on credit (and not have to save for anything) then most likely they will also have a huge credit card debt later on. (Let them use cash instead of credit cards!)

[Michael]

I agree with all five of them! (I have to say that as I'm Michael Rubin.) Nice to "meet" everyone.

More importantly, the lack of basic financial literacy is an enormous problem in this country and only getting worse. As a parent of a 2 year old, I've already learned how kids constantly learn: from both their parents and from society at large. You can't count on the best behavior of strangers, so you better be the role model you want them to have a chance of following later in life. True in life, true in finance.