5 Things NOT to Do With Your Money as a Recent Grad

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I arrived in New York with an Ivy League degree, a job at a prestigious consulting firm waiting for me, and no clue at all how to manage my money. My Economics degree and a summer internship on Wall Street had taught me how to think about global markets, but they hadn’t armed me with the personal finance skills I’d actually need as a functioning adult. A year into life in the “real world”, despite all outward appearances, I was broke.

If you’re a recent grad, I bet you’re entering your first summer out of college with a shower of advice from family and friends. You probably just want to get a cool job, move into an apartment with furniture that actually matches, and party with your friends. I’m sure that listening to more advice from someone who is older and claims to be wiser probably isn’t what you want to do. But here it is anyway. My 30 year-old self sure wishes that someone would have told me not to do these five things when I was your age.

1. Don’t Live Somewhere You Can’t Afford

By all means, move to the big city. If you want to live in New York or San Francisco or LA, you should. Just find a room in an apartment you can afford. And “affordable” means no more than 1/3 of your monthly after-tax pay.

When I moved to New York, I signed the lease to a beautiful, newly renovated apartment in the Lower East Side that had a private outdoor terrace with stunning views of the Manhattan skyline. Even though I had a roommate to share the cost, I was still spending half of my take-home pay on rent.

Don’t do what I did. Don’t spend so much of your money on rent. You’ll still have fun in your first apartment out of college if it’s a few more subway stops away from the scene. And if you make a few solid friends in the big city, you can probably crash on the sofas of their swanky, overpriced downtown apartments.

2. Don’t Act Like You’re Rich

Only a few months into my professional career, I got a share of a beach house with my friends. It was a great way to get out of the city and bond with my best buddies who all shared the house.

The problem? Most of my friends worked in finance and could afford a vacation house. I couldn’t. And realistically, no one in their 20’s needs a vacation home, regardless of their occupation!

Moral of the story: If you act like you’re rich at 22, you might be poor as dirt in no time.

3. Don’t Excuse Your Reckless Behavior

Once I realized I was struggling financially, I went to my trusted older sister for advice. She is five years my senior and had also lived in Manhattan right after college, so I figured she could bestow a few tips.

She first asked me what I spent my money on. I told her it largely went to rent, and the rest went to weekend dinners out at restaurants with my friends, cocktails at our favorite bars, and taxis to and from all these places. Of course, she pointed out the obvious – I could afford to cut down on “fun”. I rejected her advice and just told her she “didn’t get it”. At the ripe old age of 22, I was not about to give up my social life to start saving.

I was just making excuses. My friends and I could have spent time together without spending money. So, plan a few fun nights in every month, and you’ll be saving money in no time. I can promise you that in five years, the distant memories of club nights out will be a lot less valuable than having a bit more tucked away in your rainy day fund or – gasp – a retirement account.

4. Don’t Neglect Your Rainy Day Fund

Even though I traveled for work and my expenses were largely covered by my firm during the week, I lived paycheck to paycheck. After two years, I had barely saved enough for a down payment on a used car when I moved to California. That used Honda ate up all my savings, and I was lucky that I didn’t need to put another down payment on an apartment. I couldn’t have done it. I didn’t have any financial cushion if times got tough.

The move to California showed me that saving for a rainy day – or to finance my life’s goals – was non-negotiable. A good rule of thumb is to have enough money stored away and easily accessible to cover your expenses for 3-6 months. If you suddenly lose your job or have a large unexpected medical bill, you’ll still be able to make ends meet. So take a few hundred dollars out of each paycheck and sock it away until you build that rainy day fund.

5. Don’t Forget to Track Your Finances

In case you hadn’t guessed it already, I was not tracking my finances in my early 20’s. I knew that I spent about as much as I earned, but saving and investing were a foreign language to me.

Your 20’s are the perfect time to build healthy financial habits. With the help of a personal finance app like Personal Capital, you can learn to keep track of what you spend against what you earn, owe, and invest. And when you start tracking your money, you’ll want to grow your money.

Get Off On The Right Foot

Your first years out of college are by no means a walk in the park. You’ll go from spending your time with friends and in class to working long hours for lower pay than you’ll likely make at any other time in your life. But you don’t have to make bank right out of college to be able to start saving up. Follow my five tips on what not to do, and you’ll be taking the first steps to enjoy and afford life in the “real world”.

This post originally appeared in The Huffington Post Blog.

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Michael Ruderman

Michael Ruderman

Michael is Director of Marketing at Personal Capital. He oversees cross-functional growth and engagement projects for over 1 million Personal Capital users. He is also a regular contributor to the Huffington Post and holds an MBA from Stanford.


  1. Colin

    Good advice all around.

    When I graduated, already an introvert, bars & going out weren’t my thing so I’m sure I saved a ton of $ there. Through scholarships & parental help I graduated debt free (something I know is nowhere close to the norm) and ensured I stayed that way. I lived in a place that was bigger than my dorm rooms from college but not all that glamorous, but saved me a ton (this was my choice, not dictated by my income). Between these things, this allowed me to max out my IRA and 401k annually. While my income rose, my lifestyle mostly stayed the same (til recently) so whatever I had left over after bills & retirement savings went into more investments.

    Now I’m months away from putting down 20% on a house w/ my wife and as a late stage millennial (34), I’m well ahead of my peers in my retirement savings. I know this is far from normal for many and is mostly a product of being born in a family of savers who helped w/ my tuition, and encouraged me to live at or below my means.

  2. Hans

    Good advise, except one mistake… You said no one in their 20’s needs a vacation home. I disagree. A vacation home is great. I own two house, one is my vacation home. I’m 27 and bought my first house at 24 and second one at 26. I have no regrets, and while other people complain they they don’t have time to relax… I do, I’ve spent 60 days in my vacation home in one year. Life is all about priorities.. I work hard, but know how to chill on the weekend at the mountains. Real estate is a great thing to invest in, but start small, and know what a good deal is and don’t settle for less.

  3. Apartment management

    Nice, I’m glad that someone is willing to share his experience and advise the ones that start walking the path. It is really motivating when one read this and get to work for it. You are great Michael, keep the good work!


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