College grads: here’s the money advice your family didn’t give you

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By Bob Sullivan | MarketWatch

Recent college graduates get a lot of advice from a lot of directions. Mom, Dad, school friends, crazy Uncle Harry, the internet, Instagram: Get a job, take a European vacation, don’t buy a car, move somewhere new, buy a professional wardrobe, go to grad school, follow your dreams, take that job offer now.

But you’ll hear a lot less advice about money — because no one wants to talk about money. About that looming student loan payment. About budgeting. About how to pay for those clothes, or that trip. You have six months before you have to start paying back those loans, why worry about it now?

I’ll tell you why: Opportunities start coming fast and furious in the months following school, and it’s great to try many things as you find your way. But every dream you have right now — to travel, to solve world hunger, to start a family, to buy a dream car — will be enabled, or denied, by money. If you want to follow your dreams, however noble they may be, you’re going to need to have a good, smart relationship with money. So here’s some advice you may not get elsewhere.

1. Make small money mistakes, not big ones

The most important piece of advice you’ll get at this time: Make small money mistakes, not big ones. You’ll stumble, you’ll overpay for a hotel room, you’ll forget to a pay a credit card bill. That’s life. The key is escaping your 20s without saddling the rest of your life with a financial ticking time bomb. Don’t stretch to buy a house prematurely. Don’t buy a car that comes with a $500-a-month payment; buy something practical instead. Do live with roommates — housing costs are the number one budget killer. Do start saving for retirement immediately, however boring that sounds. (Wait until you see the math in a moment). Do make good headway on paying down student loans, but don’t rush that. A 20-year plan is fine. Don’t take on 6-figure debt to go to graduate school unless you feel assured you’ll have a six-figure job the day you graduate. Do use credit cards, when you have to, to pay for that big move to your new job. But don’t live a life where credit cards are required to get you through the month. And that 3-month European trip? Well, I’ve some bad news for you.

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