This spring will mark ten years since I graduated from university, and once I pick myself up off the floor where I have fallen due the shock of realizing that, I will tell you all about what I've learned during that time. Between moving to a new country, getting my first real job, changing careers, moving apartments, and dealing with a host of other Life Stuff, I've learned a lot about financial health in the past decade. To anyone just starting on this journey of adulthood, here's the financial advice I wish I'd had—or followed—way back when.
Be Clear About Your Goals
Before you start looking at where your money is going, it's a good idea to have an overall, long-term roadmap for where you'd like to allocate your income. After basic living expenses, think about any goals you might have for your life that savings can help make a reality.
Hint: debt repayment, whether it's student loans or a line of credit, should be top on your list. Ditto saving for your retirement (I've been told it approaches faster than you think). Long-term saving for a property, travel, or business investment can come next.
Yup, you need one. Start by figuring out your non-negotiables: rent, bills, food, transport. This group of outgoings should all be automated with direct debits from your account, if possible. Scheduling your payments to take place as soon as possible after payday is helpful as well.
The middle group of expenses is the stuff I spoke about above: debt repayment and savings. Also non-negotiable, but the amount and rate of contribution is fluid and comes down to your individual situation. As long as you're doing something in this area (see the next tip), you're good.
With those all sorted, you'll know how much you have per week to eat out, do things, buy pretty stuff, etc. If you need to go "cash-only" for your disposable income for a while and withdraw a set amount per week to use, do that. It's not a bad way to get used to living on a budget.
Automate Your Savings
Any savings. Look, I remember what it's like when you're fresh out of school: the idea of being able to put money aside when you're basically living hand-to-mouth is laughable. But putting away even $20/month (or $5, or $100, or whatever you can afford), by direct deposit, as soon as possible after payday is the best way to get into the habit of saving. If you time it right, you'll never "see" that money in your account—and thus, won't be tempted to spend it—and the amount you put away can grow as you advance in your career and earning power. I have a lot of colleagues 5-10 years my junior, and this is the number one thing I tell them over beers in the pub. (Well, that and how they should be wearing sunscreen every day.)
Be Careful With Credit
I'm not anti-credit card. I've had one since I was at least 15 and know the benefits: using one wisely (and by that I mean paying your balance in full every month) develops your credit score, and it's a good safety net to have in an emergency. But I don't have to tell you that "just charge it" is a dumb attitude to have—you're essentially taking today's mistakes and making them Future You's problem.
So have a credit card, but use it sparingly. I find that a strip of black electrical tape over the long card number (yes, really) serves as a reminder that it shouldn't be used for impulse shopping—and is super embarrassing to whip out in a store, so there's that, too.
Make Your Own Darn Lunch
So maybe this tip isn't as Finance 101 as my others, but it'll certainly save you money. Think about how many weekdays your entire career is likely to contain. Now budget a realistic amount per day to spend on lunch, and add it all up. Scary, right?
Bringing your own lunch to the office is not only cheaper but healthier as well. It also doesn't have to mean eating at your desk or committing social suicide: in the warmer months, I often bring my packed lunch to eat with colleagues in the park—or in our office break space in the winter—and a few times a month I give myself carte blanche to go sit in a restaurant and order whatever I like.
What was the best financial advice you've ever received? What would you tell a new college grad about money today? Chime in below!
Re-edited from a post originally published 4.27.16-NT