Don’t click away. You are not at the wrong blog, despite the title that may leave you scratching your head. I’ve discussed finances previously in the context of how we handle finances with me being a SAHM, and have received requests for more money talk. I am no financial guru, but as David and I are pretty aware of our finances, consult experts like financial planners and CPAs and are very intentional in wanting to raise financially savvy kids, I thought it could make for an interesting topic to discuss here. Plus I know some of you ARE financial gurus and I’d love for you to weigh in!
With all the graduations happening this time of year, it reminded me that I graduated from college 10 years ago- say whaaa?! In that time I’ve learned a lot about handling money. David and I were chatting about it last night and discussing things we really want the girls to know and grasp before they go off to college one day. Luckily we have a few years before moving them into dorm rooms, but if they were leaving today, here are the values I’d like to instill in them.
Avoid the free pizza gimmick and other traps. David and I both remember seeing offers like this regularly on our respective campuses. A free pizza if you sign up for XYZ credit card. Or perhaps a $20 gift card if you roll your credit card over to XYZ company. These traps can get you sucked into financial messes early on and it’s best to avoid them. I think it’s a fine idea to get a credit card to start building credit, but research the options, pick one that fits your needs, stick with one and don’t treat it like free money.
Pay off credit card in full each month. Speaking of credit cards, don’t use it as a magical spending card. Don’t charge things you can’t afford and pay off your credit card balance in full each month. This doesn’t mean just the minimum payment. Paying the minimum only is what they want you to do so they can take advantage of their jacked up interest rates. Don’t fall victim to it.
Avoid debt and don’t buy things on payments. My goodness, there are some tempting offers out there. New furniture that you don’t have to pay a cent towards for two years? A shiny new car for no money down? Deals that are too good to be true usually are and it’s not difficult to get slowly strangled by monthly payments. Instead, save your dollars and buy what you need in cash.
Get comfortable not spending the same as your friends. Honestly, this one was a tough one for me personally. Eating out, buying a new dress, deciding where to go for spring break and choosing where to live were all decisions I had to make, but often found myself not at the same spending levels as friends. I learned to improvise and sometimes to just say no otherwise I’d pay for it (literally) when my monthly statement showed up in the mail.
Work. I got my first job at 15 and worked through college too and though I know some families prefer kids to just focus on academics as their job, working was really good for me. It gave me an appreciation of how much effort it can take to earn a buck and I was less likely to spend it all so quickly. I worked as the classifieds ad manager at UGA’s school newspaper, The Red & Black, and also as a waitress at Buffalo’s South West Cafe. A word of warning if you’re considering waitressing- I LOVED it for the record, but walking out with a wad of cash can also be more tempting to spend. Get it in the bank fast.
Borrow the least amount you can (or none at all) for college tuition and expenses. I went in-state to The University of Georgia. At the time the state offered a HOPE scholarship, meaning that as long as I kept my grades high, my tuition was covered. I remember thinking this was a good thing (because otherwise I would have to pay for it myself) but I don’t think I fully understood what a serious leg up it is to graduate without student loan debt until I was out of college. I have friends that 10+ years after graduation are still paying off debt and it will inhibit your ability to save. Instead of taking out a loan as your first option, search out scholarships, work to pay your way, consider your school selection and look for programs that offer incentives.
[Tweet “Being financially savvy starts in college. Here are 9 need-to-know tips from @ahealthyslice #graduate #collegebound #moneymatters”]
Focus on creating healthy financial habits. David came up with this tip and I really liked it. Being out on your own for the first time is like being at the very beginning of a marathon. In fact, heading off to college is like just tying up your laces. You’ve barely gotten started at this point, but starting to create good habits, like saving what you can, making and sticking to a budget, not going crazy with credit cards, etc will serve you well. It’s not so much that saving that $5 in college is going to be life changing, but the act of learning to save instead of spend frivolously certainly will be.
Take advantage of college resources. If there is one thing I could just kick myself for, it’s for not realizing what I had until it was gone. I loved college, but sold myself short on accessing all it really had to offer. Colleges are a gold mine for information. Sure, there is what you learn in class, but there are also so many extras like clubs, seminars, expert talks and more that are usually offered for free. Take full advantage of personal finance lectures, investing clubs, career counselors, networking opportunities and all the other wonderful resources at your finger tips.
Consider the financial implications of your major. Education is a funny thing. I think education is vitally important but going $100k in debt for a degree in basket weaving just doesn’t make financial sense. I don’t mean for this to discourage you from following your passion, but if your passion is going to lead you to a lower-income producing career, find a way to go about it that doesn’t put you in massive debt. This will actually allow you to continue following your passion through life without dealing with the crippling reality of having debt that eats your entire paycheck each month.
I’m fortunate that I grew up with financially savvy parents who taught me how to balance my check book, be responsible with money and always live within my means. I hope to do the same for my girls and encourage them to be smart and generous with their money. We are just starting to get into money with Hailey (I love Dave Ramsey’s concept of having three piles: save, spend, give), but that’s a post for another day.
What are you grateful you knew about finances as you graduated high school?
What do you wish you would have known/understood earlier?
Love this! We are so passionate about this topic as we parent now, because of our experiences in that season of life! Neither my not my husbands parents ever taught us how to handle money, and my husband has over $100k in student loans (his parents decision, not his, which is the worst part of it all) which leaves us in this awful debt and horribly high payments. No one, at least when I was going to college, was warning students about these traps and loan downfalls! But it’s definitely Taught us some important lessons that we will be teaching our children as well. Georgia did it right! I can’t believe that kind of deal even existed! Glad you shared.
Brittany Dixon says
I can’t even tell you how many times I’ve said how shocked I am that more financial skills aren’t taught in school. They have a life-altering impact, but yet I learned nothing about finances in high school. Until I graduated COLLEGE, I had no sense of how nice being debt free was and remember being jealous of my friends who had extra loan money to go shopping with. The bright side is that it sounds like you and your husband understand it all well now and your kids are lucky to have you to show them a better way!
John J. says
A lot of financial wisdom shared here. These principles apply to all people as they focus on finding a balance between earnings and expenditures as they go forward financially through life. “Teach your children well” as the song suggests.
Jessie @ The Acquired Sass says
Oh man. I’ve always been beyond my years & sensible when it comes to making purchases & not spending beyond my means. But boy oh boy do I wish my parents had told me “NO” when I picked the school I did. I could have stayed in state and gotten ~$2500 BACK from the school each semester, but I wanted to go somewhere new & exciting. So, instead I graduated with 50K+ in debt. I worked my butt off to pay that off in 2.5 years. Like scrimped & saved & then scrimped some more.
I don’t regret it now, ’cause it has led me to where I am. But I just think if I had an extra 50K lying around, how much closer I would be to retirement…
I love that you plan to teach your kids about this. 🙂
I don’t feel that I ever got an education from my parents. I feel like I picked up the logical bits on my own & independently researched the rest.
Brittany Dixon says
I’m super impressed by your dedication to paying off that debt so quickly. That is no small task and you totally demolished it- you should seriously be really proud!
I feel the same way as some other posters… my parents really didn’t teach me anything about saving. I had no concept of student loan debt until my parents stopped being able to help pay for college my senior year. I had to take out an extra loan to graduate and I’ve been a complete saver ever since. I think it’s so wrong that everyone puts an emphasis on colleges without worrying how to finance it. Student loans aren’t “free” money, but we were always told its no big deal to have students loans! I have always worked a few jobs and been frugal, so I am not in a terrible financial situation because of the loans but I do wish I stayed in state for college or sought out more scholarships.
Laura @FitMamaLove says
I’m also trying to teach my kids about money young since I felt like no one really taught me anything about it. Both my kids have a “Moon Jar” I bought on Amazon that has a place for spending, saving and giving. We also bought the book to go along with it. Even though they’re young (3.5 and 6), they both get a small allowance and need to split it up between the jars–not just put it in spend! It’s been a really helpful tool in teaching them about money!
I didn’t know much about finances, but I knew to never carry debt on a card, so while I had a credit card, I paid it off every single month. I was a poor poor college student, but I lived within my means, and the only debt I carried were some (unfortunate) student loans. I want to make sure our kids are set up well financially so that they don’t start life in debt!
Alyssa @ Renaissancerunnergirl says
I actually got very interested in personal finance only after college, during law school. My dad gave me a few books to read after college graduation when I turned 21, but honestly I wish it had caught my attention earlier, because it would have made me consider the ramifications of law school debt much more seriously. I’m much luckier than many who have gone the same route, but now I’m also in a position where I try to save as much as I can and pay down my (thankfully interest-free) debt so that, as you said, later in life I can make choices like choosing a more fulfilling career with a lower income, or being a SAHM, while also having started to build a pretty good nest egg for the future. And while some would say they’re extreme, I think even being aware of blogs like Mr. Money Mustache makes you think more carefully about spending!
I love talking about personal finance! My husband and I got interested in it about a year or so after college and now we “meet” regularly (okay, on Sundays – we are total nerds) to update our budget, make goals, and plan out our future investments.
Not only should college grads pay off credit cards in full, they should be savvy about using them. I have three credit cards that I make work for me. I of course pay them off each month (rule 1), but I also use cards that will give me the most cash back or mileage points. I have a Mastercard DoubleCash that I use for all my daily purchases and I get 2% back on everything. I also have a Chase Freedom I use for its 5% cash back categories that change each month (grocery stores, gas, Amazon). I also have a Virgin America card that I use for flights as the points add up quickly and I get perks with my favorite airline. I’ve saved a ton of money by simply using credit cards instead of my debit card (umm, I don’t even know my pin) or cash.
College grads should also do everything they can do start thinking about retirement. It may seem early, but if you have a 401k with your first job, USE IT! We naively didn’t max out our 401ks the first couple years of our “adult jobs”, and regret it because the money compounds so quickly once you get into your 30’s. My advice is to make sure if your company have a match, contribute enough to get that match at the very least and if you get a raise, use that extra money to go into your 401k each year until you can afford to max out. Then, any additional savings should go into mutual funds that you can get set up with Vanguard (yay dividends!).
Also, we follow a lot of the Mr. Money Mustache rules to save and live way below your means to reach an early retirement. We’ve been fortunate enough to have great jobs to allow us to save, but combined with using these principles, we are probably 5 years shy of retiring if things go as planned. We both grew up with very very little money from single parent households, paid for college ourselves with scholarships and minimal student loans and working during college. It wasn’t easy at times, but it’s been worth the sacrifices we’ve made.
Wow, this is awesome! Building a good financial foundation for yourself is really difficult, especially when you’re young, but it can be done. Thanks so much for sharing your tips! Enjoyed reading this!
I graduated college four years ago and the one piece of advice I wish I had before I left was exactly what you said on the fourth one…When you see your friends spending so much money on things it becomes very tempting to spend just as much (if not more) money than them. Good stuff 🙂
Aaron C. says
One money saving tip I like is attending a 2-year college with a transfer degree program. You can get your prereq’s out of the way and focus on your degree core when you go to University. It comes at a cost though, you miss chances to make friends with freshman and fun freshman events, but that’s better than doubling your debt.