Dear Graduate… A Handful of Life Lessons Just For You
It’s graduation season, and I know that means huge life change for many of our readers. If you’re about to graduate, I bet you have the feels one way or another. Maybe you’re thrilled and longing for change. Or maybe you feel anxious and a bit overwhelmed.
While I’m simply a fellow traveler, I did take some time to reflect on my life post-school — the ups, the downs, and the insights I’ve gathered along the way. At The Vantage our driving purpose is to help you live the life we know you can attain. While our focus has a strong financial bent — after all, it’s an under-taught and unavoidable component to living life on one’s own terms — our purpose extends far beyond the money.
I don’t pretend to know all the answers, but these are a few life lessons I try to remember myself. Some are purely financial, some are adjacently connected. Some are immediately implementable, some take time to play out. Some may seem valuable to you, others not so much. Hopefully something on this list can help you transition effectively into the next era of your life. Take a look:
- Focus on what you can control. Our world is a crazy, complex place, and the internet’s firestorm of updates makes it difficult to find the signal through the noise. Political, economic, and social turbulence are often important but also often distracting. Learning when to stand up is powerful but so is learning when to stand down and let go. Most issues aren’t worth your time. By focusing on what you can control, anxiety — monetary and otherwise — will affect your well-being far less.
- Keep track of your spending. In any realm, learning to improve is tough if you don’t track your actions. Through budgeting you can hold yourself financially accountable and improve on your past actions. Keeping score only delivers upside.
- Concentrate on the highest impact expenses. The Pareto principle states that about 80% of any outcome stems from 20% of the actions taken. It’s a principle that holds across most domains — including finance — and often the 80/20 spread is even wider. In reality only a small handful of expenses comprise the majority of where one’s money flows. Therefore, put far more effort into reducing your housing costs than finding deals on clothes and appliances. The little expenses still definitely add up (i.e. don’t go to Starbucks everyday), but there’s more to be gained by focusing on what matters most.
- Systems > goals. Goals fall short because they lack a game plan and often hinge on arbitrary end dates. Systems prove successful because they’re a way of living — progress at all times. With good systems in place and ignoring goals, you’ll likely end up better in the end. More about this here.
- Beware of lifestyle drift. It’s a little too easy to increase the quality of your lifestyle at the pace in which you receive pay raises. There’s one issue: by doing so you’re failing to save more. Although it’s fine to treat yourself occasionally (you earned it), plug those extras dollars into investing for your future. Your future self will thank you.
- Optimize for happiness. That almost definitely doesn’t mean spending more money (which surprises most people). Learn new skills, spend time with friends / family, help others, gain new experiences, stay healthy and jealousy-free. Study after study proves that even though people think buying more things will make them happy, it actually doesn’t but sucks them in deeper. You can be smarter than that. Start here for some ideas.
- Be a learning machine. Your education doesn’t stop once you leave school; it just starts operating on your own terms. Of course, learning basic skills like handling money is important; however, even more importantly, as the world changes it’s important for us to adapt with it. Our adaptive abilities — and therefore the value we can add at work and elsewhere — almost perfectly correlates with our desires to learn.
- 401(k)s and Roth IRAs are your friends. Thinking about retirement super early on may seem funny, but it really isn’t. The earlier you start preparing the sooner you can attain freedom and live better off in the end. 401(k)s often have employee matches — ahem, free money! — if you participate. And both account types hold tax benefits that are totally worth taking advantage of as soon as you begin making money.
- Make your personal finances a little less personal. Someone clever once quipped that personal finance is is more personal than it is finance. It doesn’t need to be. Embrace financial intelligence as part of your identity — it’s something to be proud of. Face your challenges head-on. Ask questions when you have them (others likely have them, too). And don’t feel weird sharing what you’ve learned or getting the conversation started (others will be grateful). The upside is way larger than the downside.
- Where you live and who you spend time with matters. Humans are social creatures, and we constantly fall prey to conforming to our nearby surroundings. It’s almost unavoidable an unconscious at times. Therefore, think seriously about who you hang out with and where you reside — it’ll have a huge impact on your lifestyle whether you realize it or not.
- Prioritize paying down debts. Student loans are an unavoidable part of life for millions of people and that’s OK. But also know that debt can be financially crippling if not handled well. Pay it down ASAP, especially if the attached interest rate is high. This doesn’t mean have no fun in life, but it does mean that you should be extra disciplined with your expenses until debt is no longer a burden.
- Credit cards aren’t evil. A bizarre number of people think credit cards are evil. Trust me, they’re not; most problems lie primarily in user error. If you’re disciplined, you’ll be fine. Choose your card wisely (here are some good starter options). Don’t carry a balance. Be aware of fees. It’s important to start building your credit score early, so don’t let the haters scare you away.
- Don’t buy a new car. This is one of the worst purchases you could make. New cars depreciate rapidly and will likely put you in debt. Quality used cars are significantly cheaper and work just fine. What’s even better is not owning a car if you don’t need one. Here’s more on hacking your car costs.
- Build a cash pile for a rainy day. Too many people can’t cover surprise bills, and, trust me, they’ll pop up. It’s important to build a cash pile for when life hits down-points and when large expenses arise. Otherwise, you’ll end up in a pinch.
- Time value is your friend now more than ever will be. As great as it is to have a nice cash position, it’s even better to put your excess cash to work. Real wealth derives less from what you earn and more what you do with what you earn. The earlier you begin investing the exponentially more wealth you’ll have in the end. Investing deserves some time in your financial life from the get-go. Here’s how to start.
- Prioritize your health. It’s common sense but somehow ignored far more frequently than it should be. Not only does your health affect your lifespan and how you feel day-today, but it has financial implications too. Healthy people tend to be more productive, and staying healthy decreases your bills over time. Plus, as long-term thinkers, we reap the most reward the longer we stay around (compounding!). Sounds crazy to think of when young, but the habits we set today stay with us for decades.
- Seek out optionality. Set your life up in a way in which new opportunities can crop up easily. The more options to move forward you face, the more control you have over your future. Plus, you’ll probably go further that way, too. Landing in dead-end roles can cripple your long-term abilities to do great things.
- You miss 100% of the shots you don’t take. When faced with a low probability event — maybe seeking out a promotion or winning a contract — fight for it like it were certain. Too many people justify avoiding action because the odds are against them. If it’s important, then it doesn’t matter what the odds are. If you position yourself to get lucky enough times, eventually you will be. In a similar vein, fake it until you make it — push your boundaries.
- For the young and hungry... say yes, always. Furthermore, I believe we earn the privilege to say no to things. The more you say yes, the higher the chances of stumbling across people, ideas, or roles that can propel you ahead in life. Don’t estimate second order ripple effects! Saying no — being “busy” (all that means is you don’t treat whatever/whoever it is like a priority) — cripples opportunity. After saying yes and reaping its rewards, you’ll earn the position to turn things down. At that point you either won’t gain much from it or have already built up enough wealth to not worry about such things.
- Seek out disagreeing opinions. We humans are insanely biased and think straight far less often than we believe. It’s a problem! To counteract this, proactively seek out opinions you disagree with and fight to justify changing your mind (most people fight to never change an opinion). Very little is more powerful than bridging the gap between reality as constructed by our mind and reality as it really is.
- Ask great questions. The quality of your answers (and often your deeply held thoughts) stems from the questions you ask. Spend time thinking of great questions — questions for others and questions to mull over yourself. When it comes to your finances, asking great questions can help you figure out how to live even more effectively.
- You can accomplish more than you think. Time is our most finite resource, so it makes sense to use it well. Converting some Netflix time or video game time into productive time can set you miles ahead of your peers. Don’t underestimate what you can accomplish over the span of months and years if you make something a priority. Even giving yourself an hour of extra productive time a day can make a world of difference.
- Mistakes are inevitable and that’s OK. You will inevitably waste money on large expenses, lose money on investments, or make a wrong career move. Hindsight is 20/20. Most people react with anxiety when mistakes come to light. You, on the other hand, should try to stay calm, clear-headed and simply learn from the experience. Very few outcomes are gargantuan setbacks, and obsessing over the past is pointless.
- How you handle tough times determines who you are. Easy times are easy to handle. The hard times, though, shake you to your core and determine who you really are. Hardship may be inevitable — and it may strike more than once — but never forget that the darkest hours present you the opportunities to be the person with character you truly aim to be. Tough times shape a person far more than easy times do. Don’t let hardship go to waste, whether it’s financial or otherwise.
If you have more lessons to share, please share them in the comments. We can all learn together. And if you want to hear more lessons, sign up for our weekly email update.