It’s graduation season, meaning another class of students will walk across the podium, receive their diploma in front of beaming parents and grandparents, and will walk out of that school and enter the adult world. It’s exciting and nerve-wracking at the same time.
Parents are wondering whether their child will make it in the world, what they will accomplish, and how they will succeed without the constant guidance from home. Students are looking for the freedom that comes from moving out, getting a job, going to college, and meeting new people. Before all of that takes place, though, it’s important for new high school graduates to consider where the decisions they make at this point in their lives will lead them in the future.
I spent much of the last week interviewing and polling individuals between the ages of 25 and 65 with one question: “What do you wish you’d known as a young adult related to your finances?” The responses were specific and came with frustrations over what should and could have been, from individuals who are still trying to dig themselves out of financial mistakes they made in their early adulthood. Many heard all of the correct budgeting techniques from their parents but chose to disregard that knowledge, and most of those individuals are regretting those choices today.
I share the top five of those responses with you today in hope that, as a new high school graduate, you will take the advice of a generation that goes before you and possibly avoid making the same mistakes.
If you want to be successful beyond just this summer, it’s critical that you create goals for your future. Start with where you want to be one year, five years, and ten years down the line. These should be personal and financial goals. Do you want to own a home, start a family, get a college degree, obtain a certain job, or retire by the time you are forty? All of those, if carefully planned for, can be achieved with hard work and dedication, but you won’t be able to reach those goals if you don’t make a plan to do so.
Once you have your goals written out, it’s important to write down the steps you need to take to achieve them.
If my goal is to be a teacher, I know that I need to get a college degree in Education, perform my student teaching, and apply for certification in the state I live in. In addition to that, I need to apply for jobs, successfully interview, and be offered a position. Each of those steps could include sub-step. For example: to get a college degree I have to determine my financing, the school I will attend, and pass all of my classes. By making these short-term goals, coupled with the long-term ones, it’s easy to see exactly what I need to do for my future.
I’ve provided a goals worksheet here for you to plan out your own goals. I suggest you print it and place it somewhere you can view it often.
Create a Budget
Cue groaning and eye rolling.
A budget is a tool that allows you to achieve financial success. Most people think of a budget as a money-management tool that takes all of the fun out of life but, when constructed appropriately, a budget is simply meant to track your money for purpose of achieving your goals.
Without a budget, you could end up like I was in college: missing payments, paying double payments, and ultimately, spending a lot more money than I had. It was stressful, and I always felt like I was losing the money battle. Enter the budget, and I’ve never felt more secure and at ease with my money situation.
Check out the following resources to create your own budget today:
Live Below Your Means
Living below your means does not mean you can’t have the things you want, rather, you can’t have the things you want if they cost more than the income you receive. For example, if you make $2,000 per month, you can’t spend $3,000 per month. This is where that carefully planned budget comes into play: if you have your income categorized and are careful to only spend the money allotted for each category of your budget, then you shouldn’t ever have to worry about exceeding your income.
It seems like common sense, but this is where most high school graduates fail. They get an apartment, sign up for television, get a smartphone plan, and make purchases without thinking. Suddenly, their expenses far exceed their income and they end up defaulting on their payments or going into debt. Use that budget, and make sure that every expense is planned for and that the money out doesn’t exceed the income you receive.
Stay Debt Free
I cannot emphasize enough the importance of staying (or becoming) debt free. Fresh out of high school, it’s hard to recognize the impact credit card and student loan debt will have on your future marriage, family, and dreams.
Most high schoolers are really excited about the possibility of getting that first credit card. I know I was. When that shiny card arrived in the mail with a $2,000 limit, I immediately went on a shopping spree. I’d never had so much money at my disposal. I bought new clothes, a couple small appliances for my apartment, and found out that reaching the credit card limit doesn’t take very long when you have no willpower (or goals). My husband was much the same way, and we entered our marriage with debt that created frustration and stress as we tried to figure out how to pay the minimum payments on little to no income.
Ask your parents and another two or three adults you trust how credit card debt has affected their lives, and I bet they will each give you a story fairly close to mine, of the struggle that debt created in their lives. They aren’t saying it to keep you from having fun, quite the opposite: they want to see you succeed in achieving all of your goals for the future, and they are well aware of the frustration credit cards can cause.
This is a hard subject to broach because, while I am well aware that many students cannot afford a college education without student loans, the cost rarely outweighs the benefits. If you do not know WITH ABSOLUTE CERTAINTY that you will be able to get a job in your field when you graduate college, then taking out student loans is a mistake every time.
Ask anyone who is still paying off their student loans in their thirties and forties whether they are happy they took them out. I will say that I wish I’d been counseled not to take them because they are a chunk of money out of every paycheck. Things will come up, and that ten-year payoff date will come and go, with you still chipping away at what seems like an endless amount of debt.
The good news is: there are some alternatives.
If you have a community college in your area, get your Associate’s degree there before moving on to a four-year program. Not only will it be a fraction of the price, but you may be able to save on housing costs by staying at home for an additional couple of years, or moving in with friends of the family. Even if everyone is pushing you to go to the four-year program right out of high school, keep in mind those goals. Does it matter how you get that degree? Or does it matter more that you don’t ruin your future by adding an excessive amount of debt to it?
Even if you are graduating this month, it’s not too late to apply for scholarships and grants. No matter how small, all contributions towards your education that don’t result in future debt or come with interest tacked on, are valuable. Even if it’s time-consuming: apply, apply, apply. It’s your future we are talking about here!
I was so blessed to have a family member contribute to part of my education. Ask around among your family and friends and see if anyone is interested in funding your college degree. (This doesn’t include your parents taking out student loans on your behalf – don’t let them do it!) Of course, when they invest in you, that means you focus on school and make the most out of it for both of your sakes. Don’t make them regret their decision.
Take a Job
Honestly, I wish I’d recognized it was okay to step back from college and take a job to pay for it incrementally. If you’ve exhausted all of the other alternatives to student loan debt, I suggest that you get a job that allows you to pay ahead on your schooling. Perhaps you have to take a year off and save that money, or maybe you are able to pay course by course and take them one at a time. However you manage to do it, you will be so much happier ten years down the line when that degree is yours free and clear.
Talk to someone
If you are still settled on taking out student loans for your degree, I’d like to make one final request: find someone working in the field that you want to enter and ask them about their student loans. Chances are, they will be willing to tell you how they made it through their degree and whether or not it’s worth it for you to take out loans in order to be where they are today. If nothing else, it’s a connection you made and food for thought.
Check out this additional resource related to debt:
This wouldn’t be a complete list without the discussion of savings. I’m not a saver, never have been, and yet, I’ve learned how critical savings is. Create an emergency fund for yourself and don’t touch it for ANY reason other than an actual emergency. Start putting even a small amount into a savings account each month that will allow you to purchase a home down the line, pay for your wedding, or invest for your retirement. Whatever your goals are, it’s time to start saving for them now. Don’t wait – it won’t get any easier when you make more money.
Check out the following resources related to saving:
Enjoy the Present
However, you choose to pursue your goals for the future, take a little time to celebrate now. Graduating from high school is quite the achievement. Congratulations and welcome to adulthood!
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