With graduation season upon us, now is a good time for me to impart my wisdom on the personal finance and life lessons I have learnt since my graduation. You may think the good times are over but graduation is just the start and their is a whole world out there in front of you. I know making a living on your own might sound scary, but heck, millions of people have done so in the past, so have some faith.
The real world is tough no doubt about it. Student debt it too high, wages are stagnant, the Great Recession made it difficult to find a job and house prices are sky high. Even with all these macro factors which are out of your personal control stacking up against you, you can still be successful if you do the right things. Here’s some candid advice for new college graduates and 20-somethings trying to make it in this great cruel world.
- Continue living like a university student for a few years. University was the most fun period of my life – and I was basically broke the entire time. I never went out to nice dinners. I rarely purchased new clothes. The houses and halls I lived in were dumps. If you can simply keep your lifestyle the same for a few years after school that can be a huge head start to getting your finances in order. It is tempting to start spending money from that new job but it is far more prudent to develop good saving habits and avoid going further into debt. And you can still have fun when you’re young without spending a ton of money.
- Don’t rush to go and get yourself on the property ladder. There’s no need to live in a nice place the first 5-10 years post college .Buying a house is a huge commitment, requires a lot of work and consumes a large part of your budget. There’s no reason to rush into buying a house when you’re young just because it seems like the logical next step. There’s nothing wrong with renting for a few years until you’re ready financially to buy a home. Instead, try and live exactly as you did in college by sharing a room or finding housemates. You should be spending most of your time at work and on your side gig instead of at home. Nobody cares if you live in a hole in the wall. It’s to be expected. Only if you’ve found a partner with a nice income or you want to start a family should you spend up on housing.
The point of saving is to invest the money. By living below your means you will have excess cash each much to sock away for your future. Once you’ve built up a rainy day fund, you need to start thinking about investing in order to to grow your money exponentially and reach your financial goals earlier. Have a read of my article about compounding to motivate you to start saving and investing early.
- Passive income is your best friend. The whole point of saving and investing is to develop passive income streams. And the whole point about having passive income streams is so that you have the optionality to do something new once you hate your job. I don’t care if you work at Goldman Sachs or Apple, you will eventually not want to go to work anymore. Passive income will allow you to take that leap of faith. Have a look at the my journey section of this website to see how I have been building my passive income. Last year I made £1,500 in pure passive income meaning I made money without having to lift a finger myself. How great is that!
- Create a massive professional network. If you’re not one of the privileged, the system is stacked against you. The people who get the best jobs are the ones who are not only smart, but who are also well connected. The best way to compete is to build relationships with people who are in power. Even if you don’t respect them because they didn’t have to hustle as hard for you, swallow your pride and break into their circle. The power of networking cannot be underestimated.
- Play a forever sport: tennis or golf or both. Sport is a great way to connect with people. Common interests bring people together, no matter what age, sex, seniority level, or race. By playing tennis or golf, you increase your chances of spending time with other people who enjoy the two sports. For some reason, tennis and golf are two of the most popular sports enjoyed by people in positions of power. If you can spend one-on-one time with a person for 1 – 5 hours, you will inevitably build a better relationship.
- Know your place. Please, for the love of God, stay humble and hungry in the work place. The first people to get fired are the know-it-alls who aren’t willing to listen and learn from others. Respect your elders, do what you’re told, and always ask whether you can help others when you’re idle.
- If you think you’re so great, go out on your own. Only a few lucky people can say they truly love their job. If you don’t fall into this category, either save hard and create passive income so you can retire early, find another firm that recognises your abilities, or start your own company. It would be a real shame if you were stuck in an environment that suppressed your creativity. Even if you fail, at least you’ll know you tried and one day you’ll look back without regrets. You’ll also become more appreciative of having a day job once you fail as an entrepreneur. Take more risks when you have less money and zero dependents.
- Stop comparing yourself to others. Five years from now you will start seeing many people your age drive expensive cars, wear the latest designer labels and purchase nice homes. You’ll constantly ask yourself, “How can they afford such things?” All you’ve got to do is do the math. A lot of your peers are not buying houses and expensive cars on their own. Its either debt fuelled spending or the Bank of Mom & Dad hooking them up. If you aren’t lucky enough to have parents who still change your diapers at 27, focus on building your own wealth. You’ll feel a far greater sense of pride.
- Take care of your mind and body. Life is messed up because our bodies are in the best shape of our lives in our 20s. Yet, we kill ourselves by trying to get ahead in our careers. Having a proper mind / body connection is imperative to prevent burnout. Burnout is what makes you irrationally quit a job with nothing lined up when you have little experience and no money. If you burn out too soon, you destroy your wealth creation potential. Do not join the majority of people who don’t care about their health. Exercise regularly. Eat healthily.
- Embrace criticism. After all it is a great opportunity to improve. You will be annoyed at older people nit picking at all your flaws. But older people have already been where you want to go. Therefore, spend as much time as possible with the people who want to give you feedback. Keep and open mind and take some of their advice. Stubbornness will get you in a lot of trouble.