What I Wish I'd Known When I Graduated From College

I graduated from St. Olaf College in Northfield, Minn., in May 2010, and then spent the summer working at Sugar Creek Bible Camp in Ferryville, Wis. In the fall, $2,000 in hand, I was ready to start my adult life in earnest as a graduate student at Luther Seminary.

After four fantastic years surrounded by friends who became family in my college dorms, I was actually excited to be moving into the dorm at the seminary. This excitement slowly dwindled as my mom and I found my room – which was barely big enough for a desk, twin bed, and small clothes closet. That was the first signal that the transition to graduate school and adult life “on my own” wouldn’t be quite as exciting as I thought. Between reconsidering my choice of schools, struggling to make new friends, and watching my college friends settle into their first real jobs with their first real paychecks while I wondering how I would make ends meet, my first couple months on my own were tough. I eventually found my way, but it took a while.

Here are seven things I wish I would have known when I graduated from college:

1.     You’re Not Behind — Yet: In college everyone is on the same level, but once everyone graduates and begins adult life people begin to financially separate fast. As someone who was continuing schooling it was easy to feel behind while everyone else was moving forward. Now just nine years later, I’ve seen how my education has opened doors to opportunities I never would have imagined. I’ve also watched as different friends have gone back to school and others have started families. In many cases, we’ve traded positions financially — and I’m sure we’ll trade them again.

Tip: Don’t give in to the temptation to live above your means just because your friends have the ability to spend more than you. Set appropriate limits on yourself. Ask friends to come over for dinner or go out for dessert or coffee instead of big meals. It’s ok to say “no” as you make the best use of your limited means. A true friend will understand.

2.     Adult Life is Expensive: My parents were fairly transparent about money growing up, but I still didn’t fully realize how much adult life really costs until I started grad school. That’s when my parents handed over the responsibility for many of my expenses they had been paying, like my cell phone bill. When I moved into my first apartment, I found out quickly that rent was just one piece of the cost of housing — and that internet, utilities, water, trash, and furniture can add up fast. Then there were periodic expenses like car registration, car insurance, and travel home that always seem to come at the wrong time.

Tip: The best thing I did to organize my life was create a sustainable budget, using Mint.com to track my expenses and make a plan. I still use this app to this day. Concerned you’re missing some of those periodic expenses? Leave a little breathing room in your budget each month so you have a buffer when they come up.

3.     Balance Your Financial Priorities: When I got my first real paycheck after graduate school, my top goal was to pay back my student loan debt as soon as possible. Everything else could wait, I thought. But after a few years, I began to realize my student loan debt wasn’t the only financial goal in my life — nor should it be. Since I had subsidized federal loans with a fairly low interest rate, I shifted my budget to accommodate financial goals (like building a solid emergency fund and saving for retirement) that demanded my attention, and other goals (like buying a house and traveling) that tempted my imagination.

Tip: Creating a plan for student loan debt is vital, but that plan should always be set in context of your other financial goals. For tips on making a concrete plan for your debt, check out this blog post.

4.     Don’t Use Your Credit Card to Build Your Credit Score: I’ve watched plenty of people get lured in by credit cards thinking that they were doing something good for themselves financially, but in reality they just ended up in debt because they had spent beyond their means. While a credit card can help you build your credit score if you use it correctly over time, there are many other (and better) ways to do that.

Tip: If you are still trying to figure out a realistic budget for yourself, credit cards can be more of an enemy than a friend. Wondering if you need a credit card? Check out this post. Carrying a balance on your card that you’d like to pay off? Check out this post.

5.     It’s OK to Not Split the Check: In college we would pack long tables with people and then each expect to pay the server individually … I’m sure we were every restaurant’s worst nightmare! As an adult, I appreciate not worrying so much about who pays for what because my friends and family  now take turns treating each other. I also take pride in paying for friends who are experiencing a financial set-back or living the student life, because so many friends jumped in to cover me when I was graduate student and they were working high-paid jobs.

Tip: If you’d like to take this step, be sure to talk about in advance so everyone is clear about who’s paying for what and when. While it may feel uncomfortable to discuss it, one conversation can save a lot of stress around the bill in the future. One word of caution: Be wary of those friends who expect you to pay for them (and certainly don’t be one of those yourself). Generosity comes from the choice to treat someone, not the obligation to cover a freeloader.

6.     Consider Using Cash: I realize it feels terribly old-school, but if you are having trouble budgeting, cash can be your friend. In graduate school I really struggled to keep my finances in check over the weekend. It was easy to put everything on my credit card and not realize the damage to my bank account until it was too late. Thankfully about halfway through my first year I found a system that worked for me: Every Friday I took out a specific amount of “fun money” from the ATM to pay for meals out or entertainment. Once it was spent, I was done. Anything I didn’t spend that weekend rolled over to the next one.

Tip: Struggling to keep your spending in check? Use the envelope system. Set a realistic (not idealistic) budget and take out cash each month for those categories where you have trouble sticking to your budget. Divide the cash into different envelopes by category. During the month, you can only spend what’s in the envelope — no more.

7.     Pave Your Own Path: When you’re first starting out, it’s tempting to begin recreating the life you had growing up. Instead, consider starting with a blank slate and working from the ground up. Don’t be afraid to experiment with your living situation, your lifestyle, and your expenses to see what fits you best. Just because it worked for your parents or your friends doesn’t mean it will work for you.

Tip: Take the time to get to know your values and goals. Visualize what a fulfilling life might look like for you and begin to take conscious steps toward it. Don’t be afraid to say “no” to the things that don’t align with your vision.

Have a recent graduate in your life? Share this post, and then direct them to my 20-minute financial check-in to help them get their financial life started on the right foot. Even if you aren’t a recent grad, this resource can help you reconnect your money and your values in a quick and easy way.

What’s one thing you wish you would have known when you graduated from college? Share below!

This week on my Facebook and Instagram Lives I’ll be sharing a few simple tips to help you tackle student loan debt — whether you’re fresh out of school or already few years into repayment. Join me Thursday, June 13, at 8pm (Central). Can’t make it? Don’t forget to watch the replay.