You can immediately set yourself up for long-term success by keying in on some essential financial focuses for new graduates. As a new grad from university or college, you’ve got the world ahead of you. Those long hours of churning through books, taking exams and wanting to break out of the education system are behind you.
You’ve unlocked freedom and a bigger opportunity to control the life you want to live. You’re ready to enter “the real world” and start the next chapter of your life.
It can be an overwhelming time as you try to balance so many new experiences and priorities. But one area will dictate so much of your future…
MONEY.
From general day-to-day money management to investing for retirement and everything in between. It’s such an important focus point that every person needs to grasp.
However, as a new grad you have the opportunity to set yourself up for financial success by improving your financial literacy and focusing on your mindset and habits.
Through some core habits and a committed mindset, the rollercoaster ride that is money and life can be steadied.
Those financial focuses for new graduates to take control of early in life are:
- Build Your Knowledge About Personal Finances & Money Management
- Avoid Lifestyle Inflation
- Invest In Your Career & Personal Development
1.) Build Your Knowledge About Personal Finances & Money Management As A New Graduate
Financial literacy is a pitfall of the current education system and society in general. One of the biggest wins you can have is to counteract those potential shortcomings immediately.
Starting with some easy to understand lessons and insights on the role money will play in your life. You’ll quickly learn that you’re in control and your eyes will be opened to the simple steps you can put into action to totally set yourself up for success.
Thankfully there are some great resources to help you get ahead of the game early in life and master your money.
Personal Finance Books For New Graduates
These two books offer wide-ranging, all-encompassing financial management teachings and strategies for someone to grasp at an early age. They are two of the best books for twenty somethings to help master your money and career.
The Simple Path To Wealth
One of the most respected and recommended books for anyone looking to take control of their money The Simple Path To Wealth by JL Collins.
As described by the author: “this book grew out of a series of letters to my daughter concerning various things—mostly about money and investing—she was not yet quite ready to hear. Since money is the single most powerful tool we have for navigating this complex world we’ve created, understanding it is critical“.
It’s an easy read with a flow and framework geared toward setting you up for success in simple, actionable steps and lessons.
In terms of financial focuses for new graduates, this book hits on all of it.
Millionaire Teacher
From cover to cover, Millionaire Teacher is a holistic overview aimed to help readers take control of their money and lives by building wealth the right way.
The key focuses outlined are:
- Gain the financial literacy to make smart investment decisions
- Learn why you should invest in index funds
- Find out how to find the right kind of financial advisor
- Avoid scams and flash-in-the-pan trends
It has a rating of 4.7 on over 2,100+ reviews. The author is Canadian and has specific advice for Canadians given the nuances of personal finance within the country vs. America.
However, this is a great book for new graduates no matter where you live.
Personal Finance Podcasts For New Graduates
Podcasts are an amazing resources to level up your good money habits and personal development. The best personal finance podcasts provided thousands of hours of amazing content.
Here are two to get you started that deliver all-around advice hitting on all areas of money management.
BiggerPockets Money Show
From saving more money, diversifying income streams, investing the “right way” for retirement and everything in between, BiggerPockets Money Show hits all areas.
They have a huge library dating back to 2018 that you can cycle through.
There is a heavy focus on hitting financial freedom and the steps you need to follow to reach financial independence.
Money Guy Show
The Money Guy Show is definitely one of the best personal finance podcasts out there today.
The show is hosted by Brian Preston and Bo Hanson, both financial planners and wealth managers.
They share real-life stories and lessons from individuals and families from all walks of life. From people early in their financial journey and others trying to maximize retirement, their show appeals across the board.
As a new graduate, this show will provide you with a huge leg up on building financial literacy early.
Personal Finance YouTube Channels For New Graduates
YouTube is another amazing resource for young adults to dive into personal finance and money management content.
Check out this article on the best personal finance YouTube channels to dive into a collection of 15+ great creators.
Here are two extremely helpful videos shared in that article that are perfect starting points as financial focuses for new graduates.
Money Management 101 of Financial Focuses For New Graduates
The books, podcasts and YouTube channels mentioned above will introduce you to all the key concepts to help master your money. Here is a quick hitting list of some of the topics they’ll touch on.
- Budget: Create your own Google Sheet or learn about different budget systems.
- Big 3: Limit your big 3 expenses as best possible: housing, transportation and food.
- Housing: Extend living at home with your family or get roommates to control housing costs.
- Vehicle: Buy a dependable used car with cash (or live close enough to work to walk).
- Food: Mitigate expensive restaurant and bar tabs and cook at home as often as possible. Save money on groceries.
- Credit Cards: Avoid credit card debt like the plague and use them as a rewards tool if you’re responsible.
- Student Loans: Develop a plan of attack to pay off your student loans. Learn more about smart ways to pay them down faster.
- Emergency Fund: Build an emergency fund of liquid cash in a high interest savings account. Here is an overview to give you everything you need on emergency funds.
- Company Match: Get the 100% match from your employer into your 401k (or RRSP/RPP).
- Investing: Invest in low-cost index funds for the long-term. See JL Collins Stock Series.
- Automation: Automate your money system and pay yourself first.
- Diversify: Diversify your income streams with side hustles and entrepreneurial efforts.
- Financial Freedom / FIRE: Learn about the concept of financial independence and the FIRE movement.
If you can get a grasp on these concepts you will be ahead of 99% of the world.
After mastering the basics you can start to expand your knowledge base. Your curiosity and personal preferences might lead you to real estate investing, dividend investing, passive income streams and so on.
2.) Avoid Lifestyle Inflation As A New Graduate
Chances are you lived a pretty modest lifestyle during college or university.
Now you’re starting your career and hopefully earning a comfortable salary. This new bi-weekly payday will likely be the most money you’ve ever received in your life. And it will keep coming every 2 weeks. Maybe you will get a bonus after your first year and progress your salary with deserved raises each year.
Well there’s no reason to not start to showcase this new level of financial resources? 60” TV, iPad, Jordans, designer bags, a round of top-shelf tequila shots at the bar, financing a new Lexus, the full 658 channel TV package, all-inclusive vacations.
WAIT!
Remember what The Simple Path To Wealth said?
Live like a college student for as long as you can. Don’t let lifestyle inflation set in as your income grows.
It will be so tempting to splurge. We’ve been hardwired this way from decades of TV commercials, Instagram celebrities and psychological warfare from marketers.
Don’t try to keep up with the Joneses and lifestyle inflation cripple your financial future. Let the Joneses overspend or get into debt as your wealth momentum builds and builds.
What Is Lifestyle Inflation (aka Lifestyle Creep)?
According to Investopedia, “lifestyle inflation is the tendency for individuals to increase their spending in response to an increase in income, which can hinder their ability to save and achieve financial goals.“
It completely contradicts everything we’ve been learning about with the books, podcasts, YouTube channels, etc.
As you start to earn more money…don’t also increase your spending.
How To Avoid Lifestyle Inflation As A New Graduate?
If you’re committed to the reading one of the books mentioned above and engaging in some of the great podcasts and YouTube content…you’re well ahead of the game.
Those can give you all the building blocks you need to avoid lifestyle inflation. Here are some key headlines to hone in on to mitigate lifestyle creep.
- Financial Literacy: If you read the section above, you’re already on track. Keep going and build that money knowledge base.
- Set Financial Goals: Setting clear goals that you want to accomplish (ex. pay off student loans, save for a house, start investing, etc.) will help you avoid lifestyle creep. Stay accountable to them.
- Track Your Money: Doing regular check-ins to understand how you’re spending vs. your budget will help you notice bad trends much quicker.
- Avoid Credit Card Debt: The interest rates on credit card are crippling. Avoid it and use them wisely.
- Focus on The Big 3 Expenses: Housing, food and transportation are generally the biggest 3 monthly expenses for everyone. Focus on managing those before the smaller things. This article is a great guide on saving on the big 3.
- Need vs. Want: Practice mindful spending on things you NEED vs. what you WANT.
- Don’t Scale Spending As Income Grows: As you earn more money, save more money…don’t spend more. This is the #1 issue people run into.
- Your Savings Rate Is Key: A savings rate is the percentage of your disposable income (after-tax) that you save or invest rather than spend. Your savings rate will be the key driver of wealth.
If you can live within your means and continue to make your personal finances a priority, you’re going to start a wealth building snowball.
The next step is to focus on scaling your income and investing in your career.
3.) Invest In Your Career & Continued Development As New College Graduate
As you start your professional career, the opportunity to break away from the pack and set yourself up for success is available from day one. The basic principles you’ve heard your entire life ring true in almost any workplace.
Show up on time, work hard, maintain a positive attitude and look for growth opportunities.
It sounds simple but take it from someone with experience in a billion dollar organization. So many people show up and do the bare minimum. And guess what they get back? The bare minimum in terms of bonuses, raises, promotions and networking opportunities.
This article on How To Manage Your Career To Make Millions More is a great read for you as a young professional.
The condensed headlines are:
- Perform as well as possible at your job
- Be likeable or ‘more likeable’
- Network within and outside your organization and industry
- Be more ‘attractive’ (in the vein of dressing well and taking care of yourself)
- Continue learning and developing skills
- Manage yourself with systems for goals, company dynamics and find a mentor
- Market yourself
If you actively pursue maximizing these 7 steps, the success will follow. The exact tactics might differ based on the industry your career is in. But the fundamental principles remain the same.
Personal Development and Career Productivity Books For New Graduates
We can all learn from others who have done it before us. And thankfully as new grads, there are some amazing books in the themes of personal development, habits for career success and productivity that can be a huge aid to your journey.
Here are 2 books on personal development and career productivity that will help you develop that forward-thinking mindset.
Principles: Life and Work
Principles is an amazing book to help shift the mindset of new grads towards career success.
The book is written by Ray Dalio, one of Time magazine’s 100 most influential people in the world and one of the most successful entrepreneurs and investors ever.
Principles, a New York Times bestseller, shares what Ray learned over the course of his career heading up Bridgewater Associates. Ray was a normal, middle-class kid and rose to heights that would see him managing billions of dollars in assets. He argues that life, management, economics, and investing can all be systemized into rules and understood like machines.
From habits and routines to growth and success, Principles can help shift your personal finance and personal development journey as a young adult.
Atomic Habits: An Easy & Proven Way To Build Good Habits & Break Bad Ones
When it comes to improving productivity and taking control of your time, few (if any) books have been as well-received as Atomic Habits.
James Clear’s book sits at almost a perfect 5-star rating on Amazon with over 180,000 reviews.
The goal of the book is to help you:
- Make time for new habits (even when life gets crazy)
- Overcome a lack of motivation and willpower
- Design your environment to make success easier
- Get back on track when you fall off course
It’s stuffed full of practical advice to reshape the way you think. As a new graduate its a perfect read as you start the next stage of your journey.
Continued Development As A New Graduate
You’re out of school now but your learning days aren’t over. You need to keep investing in your personal growth both professionally and personally.
From courses, books, mentors, new hobbies and any other opportunities to learn or grow, your financial success can shoot forward with a commitment to development.
As the great Warren Buffett said:
“Ultimately, there’s one investment that supersedes all others: Invest in yourself. Nobody can take away what you’ve got in yourself, and everybody has potential they haven’t used yet.”
Keep investing in yourself inside and outside your career.
Take an active role in looking to develop your professional skill set and knowledge from the start. Similar to the concepts we mention above, this can put you ahead of 95% of other employees in your age range.
Here are a few general tactics to help do that.
- Mentor: find a senior leader in your organization or industry to gain knowledge and insight from. This article from Forbes gives insights on how to find a mentor.
- Conferences: be a willing participant to attend conferences in your industry to grow your network and stay connected to emerging trends.
- Courses: ask your HR department if the organization has education grants to take additional courses to further your skills.
- Network: You want to be building connections and making positive impressions with all stakeholders in your career.
Outside of work, you can look for opportunities to keep learning and developing skills or knowledge. The topics can stretch outside your career field, the importance is to just keep developing.
Conclusion: Financial Focuses For New Graduates – 3 Areas of Advice (Money, Lifestyle & Career)
It can be an overwhelming and daunting time as a new graduate. The increased level of responsibility, stresses of freedom and uneasiness in this new lifestyle can be tough to master.
However, if you’re actively looking to master your finances and grow your career, you’re undoubtedly setting yourself up to take advantage of all that comes your way.
New and exciting opportunities will present themself to you as you navigate the next 5-10 years of your life. Be flexible and adaptable. You’re young and have the world ahead of you.
And hey don’t forget to have some fun too. You’re only young once.
