5 Things I Wish Someone Told Me (About Money) As A New Grad

It’s that time of year, friends.

Graduation time – at least for university and college students, anyways. (High school, I don’t know what to tell you, you’ve got like two months left. Sorry.)

This time of year always feels like a checkpoint to me – it reminds me of the always-fun adventure of figuring out this whole adulting thing on my own for the first time as a newly minted grad.

In honour of that, here are the five things that would have made my life a lot easier if I had known them in those fresh new grad days when I was, in all honesty, probably more stressed out than I ever have been since.

1. Breathe – You Have Time

You are likely making the lowest salary of your career right now. So as much as you need to be responsible with it, and live within your means, and all that jazz – be gentle with yourself.

It can be really stressful when you think about all the things you want to do, and accomplish, and pay for in some way, shape or form. Maybe it’s travel, or retirement savings, or a wedding, or a house, but for now, take a deep breath.

You have time. You will get there. Don’t kill yourself trying to reach all of those goals at the same time. Give yourself some breathing room.

See also: Yes, You Can Survive on an Entry-Level Salary

2. Avoid Lifestyle Inflation

It’s really – really – tempting to let newfound income go to your head. And fun story, this applies just as much to any eventual raises as it does to the transition from student to earning-an-actual-income.

But barring a few really significant raises you might score in your life, the jump from being a student to earning a full-time income is one of the biggest jumps in income you’ll probably experience.

So just be aware of how you’re reacting to the transition, and try to avoid going nuts on the lifestyle inflation front. To do that…

Pay attention to the recurring payments you’re adding to your life. When you join a fancy gym, or take on a new subscription, or commit to a weekly class, or add a daily latte to your life, just be aware of it – and watch out for how they add up. I am a great example of how quickly these kind of things can get out of hand, because when I went to look at my monthly recurring payments, I ended up saving over $1000 by cancelling services I didn’t even need.

Focus on the big three: housing, transportation and food. The best decision I ever made was to rent the same kind of apartment as a new grad that I did as a student – all but falling down, appliances from the 1950s, no laundry, with roommates. It was the only way I was going to be able to spend less than 30% of my income on housing costs as a new grad, and to be honest? I loved that place. Granite countertops and a shiny one-bedroom in a hot neighbourhood can wait. (I still don’t live like that, in case anyone is wondering.)

And for the love of all things money, don’t lease a brand-new luxury car, especially if you can get by with public transportation.

Save something for your mid-life crisis.

Make sure you allocate money to savings. The best way to safeguard against levelling up to a lifestyle you really can’t afford is to make sure you’re putting aside a portion of your money towards your savings goals. Start with a small emergency fund, and build towards other goals from there – if you ever get fired or end up between contract jobs, an emergency fund will make it way, way better.

Even if you’re spending the rest of your money, that buffer going into savings is the best way to make sure you’re not living beyond your means.

And pay off your credit card. Every month.

Yes, every month.

3. Be Realistic About Your Salary

Yes, you might be making a ton more money than you ever have before, but be careful. Just because it’s more than you’ve ever been used to before, doesn’t mean that you necessarily know what kind of lifestyle it can really support.

$40K feels like a lot when you’re used to funding an entire school year on less than $10K, but when you’re making big decisions – like where to live, and how you’ll get around – make sure that you’re not overshooting what your salary can realistically support.

A great way to check is to do a quick One-Minute Budget. It’s a (free!) 60-second way to see how your income breaks down based on popular budget ratios – like only spending 30% of your income on housing, for example.

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Honestly, I wish I had a tool like this when I got my first paycheque – if only to tell me I was probably being too aggressive with my savings goals on such a teeny income, and maybe to relax a little.

It’s also adjustable, so you can move the ratios around to suit your priorities, from buying really great food to paying down debt aggressively. But as you do that, you’ll see other categories have to drop, which is the best budgeting lesson I’ve ever learned.

You can’t afford everything, but you can afford some things.

Make sure they’re the ones that matter to you.

4. Side Hustles Are Your Friend

For me, the most stressful thing about transitioning from being a student to earning a full time income was that my income was – all of a sudden – totally set for the month. There were a set number of dollars that were mine to spend, and when they were gone, they were gone.

It turns out, this doesn’t have to be true.

I wish I had someone shake me by the shoulders and tell me

“You can make more money if you want to.”

Because it’s true. Just because you have a full time job, it doesn’t mean you’re in any way above picking up a few part-time shifts, or even better, starting up your own side hustle or business.

I’m not going to get into too much detail here, because there are about a billion great side hustle articles out there on the internet. But seriously – if you’re in any way as stressed as I was about balancing your full-time income with all of your goals, you can earn more money.

It’s an option, and one I wish I had taken more seriously when I graduated.

5. Don’t Stress About What Other People Are Doing

I had a fun realization the other day.

My monthly spending – the total amount of money that goes out the door to fund my housing, my car, The Dog, and general life expenses (ahem patio beers) – is hovering only a few hundred dollars below my total take-home pay at my first job.  

I remember hearing stories of people who made salaries that about the same as mine, who had pets and cars and patio beers and apartments that they didn’t share with roommates (and that had appliances from this century.) All I could think at the time was,

“How? How on earth can you afford all of that?”

And now I get it.

They could afford it because they were spending all of their money.

They certainly weren’t saving as much as I was, and being really strict with themselves to accomplish it. I know, because now, my monthly spending to afford those things is in some months, exactly what I was taking home at my first job monthly.

So I could have – technically – supported the lifestyle I have now with that new-grad salary. But when I got fired, I wouldn’t have had the emergency fund that made everything so much better. I also wouldn’t have been able to buy Little Car outright when I moved to the suburbs, and I certainly wouldn’t have the retirement savings and investments I have right now.

Those were the right choices for me, then and now, even given how much I worried about it. And, if I’m being perfectly honest, how much I envied my peers who didn’t worry about it.

If I could go back, I’d tell myself that I would accomplish the things I really wanted (mostly, getting a dog) in time, and not to worry how fast or slow everyone else was getting there.

I’d tell myself to just focus on taking the steps that were available to me at the time, and enjoy – or at least tolerate – the process.

I’d also tell myself to focus on what my priorities were, and to let everyone else figure out theirs.

But then again, I’d also go around telling everyone I knew to start an emergency fund yesterday, and how much to save in it… So maybe they can figure out everything after that on their own.

And I’d probably also remind them one more time that the One-Minute Budget is the best thing you can do for your money in under 60 seconds, and that you can get it right here.

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What advice would you give yourself if you could go back in time to when you had newly graduated? (I know at least a few new grads who may end up reading this post, so assume that your advice will actually reach the right eyeballs!)