Things I Wish I Knew Before Graduating From College
Personal Finance Edition To Prospective College Students
The Start
Getting into college was exciting. Moving to a new city, experiencing a new life, knowing that your life is moving forward. However, looking back I regret not knowing some of the basics of personal finance. If I knew then what I know now I would definitely make some changes.
Return On Investment
A majority of my high school friends got into top colleges, and universities in the state and country, as did I. Because of this I was arrogant and didn’t look at any other solutions after high school. See the thing is, my friends came from families that could afford to pay for their college. Mine didn’t.
Myself, I got into college, with federal and state student loans. I came out of college with about $100,000 worth of student loans and a job that pays about $65,000 a year (gross, not net). This has forced me to pay off loans in about 5–10 years depending on how much I decide to pay per month. However, had I made the decision to go to a community college I would be able to cut that debt in half, at the very least. Tuition would be cut, as well as room and board costs for 2–3 years. My return on investment for a 4-year degree would have a better return, had I went to a junior college.
Student Loans
Even if I knew that my return on investment would be longer by going straight into a 4-year college. I still did not know about the high-interest rates that the student loans have. Personally, my average interest rates across my student loans were about 8%. Which is very high, which also means more money taken out of my bank every month. There are options you can do to pay them off faster such as getting a higher paying job or refinancing or student loans so that you can get lower interest rates. I did end up refinancing my loans after college, but not until a year later. My refinancing brought my average interest rate of 8% to 4.1% which is a significant drop. Sign up with Sofi here, if you are interested in looking at refinancing rates. They will be able to tell you what rate you are approved for, for free.
Budgeting
In college, I had one debit card, and two credit cards, but to be completely honest, my parents would pay off my credit card payments, which I am thankful for. My parents wanted me to focus on school and not on my finances. However, had I taken care of my finances myself I would change a few things. I would have learned how to set aside a budget earlier because, in college, I had several expenses including rent, utilities, gasoline for the car, food, etc. Now that I have graduated from college, I had to learn budgeting from the beginning, which was not easy.
Credit and Debit Cards
Like I mentioned I had two credit cards and one debit card during my college stay. I wasn’t too crazy with money, but I would occasionally spend a little more than I would have liked and I would have most likely used my credit cards for the points. I was never worried about debt, but I never considered how my credit score would be impacted. Now that I am aware of my finances and know how it works. I would have been more careful about what I spent my money on so I could make sure I would be able to pay it back on time.
Making Money
So I didn’t know how to budget, but I did have a job. I was a grader for 3 different professors at one point. I would be making up to $600 per month. Which was not bad considering I only had to put in about 3 hours per week total. However, had I been more aware of my debt situation I would have made more time to either handle more papers to grade or get a part-time job somewhere. There are a lot of easy part-time student jobs on campus and outside of campus that I could have done in order to help pay the bills or even start paying off my student loans. In addition, I could have even started a side hustle such as driving for Uber at night to help my financial situation.
Investing
Lastly, I regret not learning about how to invest. During the years of 2013–2018, there were many companies that had their stock blow up, especially in the technology space. Had I invested in them early on my current financial position would be a lot better and perhaps would have had my money grow enough to pay more of my student loans. Even if I had learned the basics and invested in index funds I would have earned a good chunk of change from investing money that I earned from my grading job.
Conclusion
There were many decisions that I made poorly and that I regret. Of course, it’s better knowing late than never, but to summarize you or your child should not go into college blind without knowing the financial risk and basics of finances as it can impact your future deeply.
