In his commencement speech to graduates of Barnard College Monday, President Barack Obama advised them to fight for their place, to recognize the power of their example and, above all else, to persevere.
"No one of achievement has avoided failure -- sometimes catastrophic failures," Obama said. "But they keep at it. They learn from mistakes."
Perseverance is an important characteristic for young grads -- especially when it comes to finance. With student loan debt at an all-time high, according to USA Today, and the unemployment rate for Americans ages 20 to 24 at 13.2 percent, according to the Bureau of Labor Statistics, today's grads will have to work extra hard to gain a solid financial foothold after finishing school.
I asked two personal finance experts what commencement advice they'd give on money management. Below are their top tips.
Live within your means
This is the most crucial step a new grad can take, both experts say.
Always spend less than you're earning and avoid unnecessary debt, says Mike Masiello, president of Masiello Retirement Solutions and author of the upcoming book, "The 20-something's Guide to Money and More."
"Don't become part of the American instant gratification, gotta-have-it-regardless-of-how-much-it-costs mentality," he says.
Many students will have loans to pay off and will want to have mortgages one day. But if there's one debt to be avoided, it's plastic.
"Make it an early goal in life to never carry a credit card balance," Greg Karp, author of "Living Rich by Spending Smart," wrote in an email.
Don’t succumb to 'first-job-itis'
If you're lucky enough to have a job, don't go wild just yet. You've gotten used to the college student life, Masiello says -- now is the time to start saving rather than indulging in a BMW or a 60-inch flat-screen TV.
Karp agrees. "Just because you now have a regular paycheck, (it) doesn't mean you should load up on every discretionary purchase you ever wanted," he wrote.
Get a used car
If you’re in the market for a new-to-you ride, don't go brand-new. "Buy a used car that has the thousands of dollars in depreciation already wrung out of it," Karp wrote. A used car will come with the added financial benefit of lower car insurance payments.
Start your retirement fund right away
If you have a job, you may have money left over after paying your rent and bills for the first time. Travel, dining and electronics are probably what's on your mind now -- not your retirement that's 40 years away.
But regularly socking away money in a retirement account now is crucial because the money grows over time, Karp and Masiello agree. If you wait 15 or 20 years before you start contributing, your stash will have far less time to grow than if you start now.
"Automatically take 20 percent of your paycheck away from yourself from day one, starting with the very first paycheck," Masiello says. "Put 20 percent of your money into savings. I don't want to hear any excuses."
If you can get used to living on 80 percent of your income while investing the remaining 20 percent, compounding interest can help you yield staggering amounts of growth, Masiello says. He emphasizes patience, and so did Obama in his Monday speech.
"Whether it's starting a business, or running for office, or raising an amazing family, remember that making your mark on the world is hard," Obama said. "It takes patience. It takes commitment."
So, too, does building a solid financial future. Good luck!
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