Financial Wisdom to Impart with Your Graduate

There are some things that you don’t want your child to learn from their friends or learn the hard way.  One of them is the birds and the bees and the other is anything to do with money.  For your graduate it is a time full of excitement and endless possibilities but also a time of uncertainty as they transition to another part in their lives.  The following Financial Wisdom will be a great gift to share with your graduate!

#1 A Humongous Salary Won’t Mean More Happiness

Encourage your graduate to choose a career field or a job based on what they love to do and not by how much they might make. They will be spending more time at work than anywhere else so if they are miserable at work they will have a miserable life.  The key is to find something they love to do and that they can get paid for doing it. 

#2 It is Better to Give than to Receive

The people most content with their own lives are the ones that share their good fortune with others.  You have heard the saying it is better to give than to receive.  The feeling you get when you give last much longer than the feeling you get when you spend your money on stuff.  Giving of your time and money develops discipline that will serve them well in any aspect of their lives. An awareness of others’ misfortune will help them to stay focused on what’s truly important in their lives.

#3 Expect the Unexpected, and Save For It!

Nobody likes to plan on things going wrong such as their car needing new tires or some other unexpected expense, but you need to remind your graduate that they should have some cash in safe, short term savings to cover these types of emergencies, because it isn’t a matter of if they will happen, it is only a matter of when.  The ultimate goal is for them to have at least 3-6 months of their monthly non-discretionary spending in an account separate from their checking account. 

#4 Small Sacrifices Now Could Pay Big Dividends Later

The Power of Compounding!  When your graduate gets their first job, ensure to encourage them to start putting something away for retirement.  If they put in some money now, they will probably never miss it later.  Let them know also if the company they work for has a company match, that is free money and to never say NO to free money.  You can’t stress this enough to them that small sacrifices now could pay big dividends later. 

Parents never want their kids to make the same mistakes they made when they were younger so take some time with your graduate and let them know you love them, you are proud of them and that you have changed the lock on your doors if they ever decide on wanting to move back in with you!  Kidding aside, your graduate will be on their own now so the financial choices they make now and in the future will either make their lives a little easier that what you may have experienced. At the end, we just want what’s best for our graduate!

 Steve Repak, CFP®, author of Dollars & Uncommon Sense: Basic Training for Your Money