Lately, during my phone conversations with my little sister, I have this overwhelming urge to bombard her with financial advice. All of the things that I wish I had known before I racked up credit card debt and bought a new office wardrobe. Before I spent some of my first real money on a classy pair of “big-girl” diamond earrings. Before I got my first apartment and spent absurd amounts of money on takeout. You get the drift…
But usually our phone calls are short because she’s busy studying or going between commitments on campus. Plus, she’s 20 and thinks she has all the answers. So I thought I’d compile my thoughts here in the spirit of encouraging student financial health in others, and maybe in the hope that having a written response will be helpful to her. So here we go!
- Money isn’t everything, but maybe taking an internship with a joke of a salary over several full-time job offers is not the smartest strategy. In case it isn’t obvious, this isn’t a hypothetical. I was panicked about getting a good job when I graduated, especially since half of my friends had jobs lined up by October of our Senior year. So I submitted my resume everywhere (like 200 times), and did dozens of interviews, and even got a couple of offers. They weren’t for jobs I was excited about, and they weren’t the best pay in the world, but they were jobs. Then, I was offered an internship, for a whopping $18/hour. I know, you’re all thinking that this sounds like an easy choice. Full time job over sad internship, any day! But the caveat is that internship was in the industry that I actually wanted to work in long term (none of my offers were). So I figured, $18 an hour isn’t the end of the world. I can live on that. Then in turns out that the wage quoted to me during the interview was wrong, and it was only $13 an hour. Even better.I still took the internship. And looking back, I don’t regret that because it gave me the opportunity to jump ship when my dream job was offered to me several months later; I would have felt guilty about abandoning a full-time permanent position in that time frame. But before that job offer came, I was definitely feeling stressed. I was wiping out the savings I had to subsidize my rent and living expenses because the income I was getting wasn’t enough to cover both (and before I get haters commenting, I’m sure I could make it work now that I’m a little more frugally calibrated. At the time it seemed like my only option that made sense). I don’t know what I would have done if this job offer hadn’t shown up, and I wouldn’t recommend that someone else follow that specific path out of school, especially if you don’t have any money saved up. In fact, I might even start thinking of those initial savings as my first FU fund—the money that gave me the freedom to make the choice that I thought would be best for my career, even if it wasn’t the best for my short-term finances. This is the only reason I included the word “maybe” in the title of this number.
- I know it’s exciting when you suddenly have real money rolling in from internships and part-time jobs, but DON’T SPEND IT!!! I was so excited when I started getting regular paychecks (during the second half of my senior year of high school), but instead of focusing on saving and investing that money, all I could think about was what I wanted to get (this is where those diamond earrings come in…). I did the same thing when I got a windfall in my junior year of college—I spent money on a new camera, on a two-week trip to Turkey, and on new clothes. And looking back, I’m kicking myself because if I hadn’t done any of that, I’d be that much closer to financial independence (to be clear, I’d be several thousands of dollars closer…). And maybe you’ll love your post-college job. Maybe you want to work in accounting until the day you die. But having money that gives you flexibility and freedom is never a bad thing. So hang onto it for a little while. I’m not saying you have to save every single penny, but have a clear savings plan and a budget for your expenses. It’s fine to budget in entertainment and “fun money,” as long as those line items don’t eat up all of your budget.
- You do not need to say yes every time someone invites you to go out/get dinner/ get drinks/fly to a Mediterranean island (okay, I was smart enough to say no to that last one…) This is a bit of a continuation from #2. You can have fun without having to participate in everything you’re invited to. Plus, I would guess that the island hoppers in question don’t really share some of your values (in my case, their parents’ plastic was footing the bill, so there was no way my part-time income would keep pace). It’s not a competition, and you can have more meaningful experiences with the people you care about when spending money isn’t the focus of the interaction. Again, you don’t have to cook every meal you eat for the rest of your life, but get creative and don’t focus on ensuring you have Instagram-worthy experiences. Slow down. Focus on genuineness in your daily life and interpersonal relationships.
- Start investing. Right now. Do it. That money you’re already saving because you followed #2? Make it work for you! Put some of it aside in a Roth IRA so that you aren’t tempted to touch it in the short term when your favorite singer has a concert nearby. It’s exciting to be able to watch your money grow, and you’ll get comfortable with investing before you have to do it with larger chunks of money from a full-time job.
- DO NOT TRY TO JUSTIFY CREDIT CARD DEBT. Oh man, did I make this mistake. For years, I was great about paying my credit cards off every month. But what I didn’t realize was that as I spent more, even though I was paying them off every month, I slowly had to draw down those savings I mentioned to do it. And before too long, the savings were gone. And I regretted the new work dresses I bought at full price, and meals delivered when I was too tired to cook, and the weekend trips to New York City. And now, I’m still paying off those decisions. Which is frustrating because there are so many other things I want to do with my money other than pay off credit card purchases from two years ago. And while I have a clear plan to get that debt paid off soon, it would be much less stressful if the debt never existed in the first place. Work hard to live within your means, even if it’s not as comfortable. Even if it means staying with roommates and bargain hunting for clothes and learning how to cook.
- Don’t pick a study abroad location that has an even higher cost of living than where you go to school (which is already expensive). You’ll be too poor to do anything, and you’ll be miserable. This one is pretty self-explanatory. I studied abroad in London, and my budget meant that I had £100 per week to spend (not counting the costs for my room for the semester). It was doable, but in an expensive city like London, it meant I said no to a lot of fun opportunities. It meant that I couldn’t travel as much as I would have liked. And it meant that I was way more worried about my money than I’d be if I lived in a lower-cost of living location with the same financial aid package…
- You’re an adult now. It’s great if parents offer to help, but you shouldn’t expect financial assistance for optional expenses. Your plan for summer housing should not depend on your mom paying for it. Or on her buying your plane ticket to visit friends. Now that you’re an adult and you have your own spending money, you need to get in the habit of figuring out how to prioritize it. You won’t be able to pay for everything you want, but that will help you clarify what is really valuable to you and what you can do without. The sooner you learn this, the easier it will be when you’re fresh out of school and in your first real job. Speaking of…
- Get a job. Work, even if it’s just a few hours a week. (I recommend the library, so you can study during slower periods). There are so many benefits to this. First off, you get spending money. Even if you have
scholarships that cover general expenses, this is yours, and you have to earn it every month. It also gives you work experience, and forces you to be disciplined with your time (which is definitely one of the most valuable skills I learned in college). Plus, you’re going to need references when you look for a full-time job at the start of your career, and it’s nice to have at least one that isn’t a professor! Yes, your internship is flashy and impressive, but this provides a steady income throughout the semester and allows you to give back to your college community. - Do NOT buy your books at the campus bookstore, and don’t sell them back there at the end of the semester either. Seriously, those bookstores are the biggest rip-off ever. I bought all my books used (from a variety of websites depending on where the price was the cheapest). I would also always email my professors before the beginning of the semester to ask if an older edition of the book was acceptable—those textbook publishers churn out new editions to force you to pay the full price instead of buying used, but most of the time your professors won’t care because so little changes between editions.
Then, after the end of the semester (during which I would treat my books well and be judicious with my highlighting/marking), open a seller account on Amazon and sell them to some other college student in the country. Set a competitive price and the books will be gone before you know it. Which means you then have cash to use for the next round of books you need to buy! - Find friends that mesh with your values. This is the most important piece of advice on this list. During the summer of my sophomore year, I did a language immersion program in France, and I distinctly remember a conversation I had with one of the other students. We were talking about shopping in the area, and she was ecstatic because the Chanel store was having a massive sale. Being somewhat of a sucker for fancy name brands, I was of course curious. She started detailing the deals, and was very focused on the fact that you could get Chanel bangles for “only $200.” I think I might have actually laughed out loud. And I also knew when she said that that we probably wouldn’t anything meaningful in common. But if I wasn’t comfortable in who I was and in who my friends were, I might have given in to the pressure to conform. I might have bought the bangles, and desperately tried to keep up with her spending in order to convince others that I fit in; that I belonged in their circle. Instead, figure out the circles you want to be part of and ignore the ones that you don’t. You’ll spend less money and energy trying to keep up, and more importantly, you’ll be so much happier.
Little sister, I’m so excited for you. I’m excited for the learning you’ll be doing over the next two years, for the friends you’ll make and the places you’ll travel. For your first office experience, good or bad. For your first C (it’ll really be okay; I promise). For your first real heartbreak. For failed and new friendships. But remember that this isn’t the pinnacle of your life; it’s the very beginning. And the decisions you make now can set you up for success down the road. Not only professional and financial success, but also personal success, however you define it. Which matters so much more.