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The Best Advice for Recent College Graduates
- Buy some property (a house or condo).
- Invest in stocks regularly.
- Date many people.
- Find yourself.
- Find a job you love.
How many of us wish we could go back in time and give our younger selves some advice? I know I do.
I'm not sure anything I would say to my younger self would be astonishingly profound, but in terms of financial advice, I think I'd end up a lot more financially secure than I am, and I'm reasonably financially secure. It just seems like a truism that we're not all that smart with money when we're young and we don't realize the impact our financial decisions can have in the future.
I guess that's called learning and wisdom. So since I can't go back in time and give myself the advice I wish, I want to pass that advice on to any younger person willing to listen. Seriously, this is the exact advice I'd give to myself if I could. Ultimately, when you get to be my age (late 40's), you won't have as many regrets.
And it's not all financial. There's a little bit of love and little bit of learning in there too.
Buy Some Property
As soon as you have a steady job, the first thing you should do is buy some property. You should buy as much property as you can reasonably afford. The standard piece of advice on a mortgage is that your monthly payment should not exceed 36% of your income. In other words, your debt-to-income ratio should not exceed 36%.
I merely provide this number as a jumping off point because understanding what you can afford is important. Whether that turns out to be a house or a condo is up to you. And, of course, purchasing the right property is always important as well. That's where finding a good, trustworthy real estate agent comes in. Tell that person you want a property you're going to enjoy, but one that's going to appreciate in value as well.
Sure, there are a lot of variables buying property, but generally speaking, it's a way to build wealth and credit and those will be important down the road.
I made the smart choice to buy a condo not long after I got out of college and it appreciated quite well. The mistake I made, however, was in selling that condominium and moving into a townhouse instead of buying a house. Had I bought a house, I would be much more well-off now. Perhaps that's a bit of hindsight on my part, but what I should have actually done was rented the condo instead of selling it and purchased another property. I could have then owned an income-generating property while living elsewhere. The rent would have paid down the mortgage and, by now, I would own the property outright.
Basically, I wish I would have been more informed about the impact these decisions would have in the future. At the time, I just didn't consider all my options and wish I had better advice.
Invest in Quality Companies (Buy stocks)
Consistent investment in quality companies over time is a true key to financial independence. Recent college graduates who've been lucky enough to find a job should immediately begin investing some portion of their money in stocks and keep doing so for their entire life. This will allow them to weather the ups and downs in the markets.
The key to investing well is to find reliable investing advice. There are many sources of such advice, but I can think of no better one than The Motley Fool. For very little money, a novice investor can join a community of investors, develop an investing philosophy, and get recommendations for which stocks to buy. The Motley Fool has a track record of success. There are many other services one can consult as well, but this is my personal favorite.
My story of the ramifications of not knowing how to invest well goes back to the 1990s when I knew I should invest, but didn't know where or how. I got caught up in the dotcom bubble and put my money in questionable companies because everything seemed to be going up at the time. Suffice it to say, I lost most of that money. Had I followed the advice of The Motley Fool at that time, I would have put my money in good companies like AOL and Amazon and probably been a millionaire by now.
The stock market isn't a speculation game that works for most people. It's a place to invest for the long-term. Buy good companies and hold them. I would also strongly recommend opening up a Roth IRA. A Roth encourages the buy-and-hold mentality that will pay off in the long run.
A Poll for You Old Folks
What One Thing Would You Change in Your Youth if You Could
Date Many People
I wish I hadn't been so afraid to meet new people and go on dates and get rejected. Your 20's is a time to put yourself out there, date lots of different kinds of people, and figure out what you want in a person and who you work well with. Trying to discover that information when you're past thirty gets increasingly complicated.
When I write "date many people" I'm also suggesting that people not focus on getting married. People change a lot from their 20's to their 30's and I suspect that one reason the divorce rate is so high in this country is that people get married too young. People in their 20's think they know what they want, but usually what they want changes by the time they're 30.
Do whatever you have to do to find yourself. Whatever it takes. Nothing is more important than learning who you are and learning to love and respect yourself. You may think that you already know who you are when you graduate college, but generally speaking, your 20's is when you'll really learn about who you are, what you want, and what you love. If you think you know everything you need to know after graduating college, odds are really good that you're wrong.
There are so many things you can do in your 20's that become infinitely harder in your 30's and 40's, so that's why I say "find yourself". Taking chances, dating a lot, traveling - all these things let you discover who you are and what you want. While I'm sure there are plenty of people who get married and have children right out of college and are happy, there are probably more who do that and regret that they didn't live life and explore.
There's so much to learn about life after college, so I highly recommend new college graduates not limit their options in any way.
Find a Job You Love
There's nothing worse than spending your days in a job you hate.
Recent statistics suggest that an astonishing number of people work in jobs they can't stand. Among the best things that you can do for yourself is to find a job that you really love because that's how you're going to spend a whole bunch of your time. Life is too short to do work that you hate. Many, many people find this out too late in life. You have lots of time after college to find the job that's right for you, so if something isn't working out, start looking for something that will.
When I first got out of college, I was hired by a firm that managed trusts. This was not what I wanted to do at all, but it was a job. Suddenly I was a professional. Unfortunately, they had me filing all day, every day. It was torture. Surprisingly, I got called into the VP's office one day and she notified me that they loved me and saw me on a fast track to great things. I quit pretty soon thereafter and decided to go back to school and work on my graduate degree. Although I didn't use that degree the way I imagined, I found the job I loved working my way through school and have been there ever since, now almost 24 years.
This is Somewhere I've Been
See the world so you're happy with where you are.
Traveling is one of those things that's easiest to do when you're single, free, unmarried, and without children. For most of us, that's after we graduate from college. Of course, traveling isn't cheap, so work is usually required. Still, I recommend saving up and planning some great trips. They will be things you'll remember for the rest of your life.
I was never the type to travel, but eventually visited some friends in London and realized that traveling could be great fun. Although I've never really had a bug like some people, I did plan a couple of two-week hiking vacations and ended up going to New Zealand and Peru. I didn't go with anyone either, just by myself, though the trip was with a group who I met at the locations. These were pretty intense trips with lots of physical activity and were very memorable.
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