Looking back on my own life, the hundreds of personal finance and meaning of life books and blogs I have read, and the tens of thousands of conversations I have had with clients, prospective clients, financial professionals, industry folks, and coaches of every stripe I have distilled a few very simple things that can stack the odds in your favor. These are kept as general as possible so they can be applied by anyone who sets out to pursue both personal and financial success.
If you know someone who has recently graduated from college, I hope you will share this with them.
Put Your Ladder Against the Right Wall
For recent college graduates (or anyone starting or re-starting a career), it is vital to pursue something they enjoy, are naturally skilled at, and that others value. This dynamic combination is the key to both a fulfilling work life and greater earning power over time.
When you find something that brings you joy, it fuels your passion and motivation to keep learning and improving, leading to greater achievements. Leveraging your natural abilities gives you a competitive edge and boosts your confidence (so critical for early successes). Finally, carefully considering the value that others place on your chosen path ensures your skills remain in demand, providing exciting opportunities for growth and advancement.
By aligning personal enjoyment, natural talent, and societal value, graduates can lay the foundation for an exciting professional journey that will also reward them financially.
Embrace the First Two Laws of Personal Finance: Spend < Make and Invest the Difference
Spending less than you earn is a habit. The earlier after leaving college you begin the savings and investing habit, the greater your long-term financial success. Begin by establishing an emergency fund, providing a safety net for unexpected expenses or job loss. With this cushion in place, you can accelerate your success by investing in your skills and personal growth while also exploring side-hustles or entrepreneurial opportunities to enhance your earning potential and generate multiple streams of income.
Once you've invested in yourself, consider allocating a portion of your savings towards publicly traded equities. This long-term wealth-building strategy allows you to participate in the potential growth of the global economy and create future passive income streams. Don’t overthink this – keep it simple and inexpensive. Focus on broadly diversified global equities and automate the investing process as much as you are able. When it gets complex, don’t be afraid to engage excellent tax, legal, and financial professionals.
Never Stop Learning
Continued learning beyond college is important for both better living and better finances. Expanding your knowledge yields a deeper understanding of your strengths, passions, and values, leading to more informed decisions and a more satisfying life. Ongoing learning in your field or related areas enhances your work performance, making you an asset to employers and increasing your earning capacity. It equips you with the latest skills, industry insights, and emerging trends, opening doors to promotions, higher salaries, and entrepreneurial opportunities.
Embracing lifelong learning fosters critical thinking, adaptability, and empathy. It broadens your perspective, allowing you to engage with diverse ideas and cultures. This will enrich your interactions with others while contributing to a more inclusive and interconnected world. By staying curious and actively seeking knowledge, you can navigate a rapidly evolving world with confidence. The journey of lifelong learning can unlock your potential, increase your financial prospects, and lead you to a more meaningful and fulfilling life.
Avoid the Landmines
It’s not enough to do all the right things; you must also avoid doing some of the wrong things. Many a positive plan is undermined by common pitfalls. The careful navigation to avoid potential setbacks begins right after college. Steer clear of activities that can damage your personal and professional reputation, such as engaging in illegal or unethical actions. Always prioritize your long-term well-being over short-term gratification and make choices that align with your values.
It is true that you are the average of your 5 closest relationships, so be mindful of who you surround yourself with. Be cautious of individuals who may exploit or manipulate you for their own gain. Seek out supportive and trustworthy relationships that foster mutual growth and offer genuine support. Surrounding yourself with positive influences contributes to your personal development and helps you avoid being taken advantage of.
Additionally, be cautious about taking on excessive debt. While it may be tempting to enhance your lifestyle, overburdening yourself with debt can hinder financial stability and limit future opportunities. By managing your finances wisely and minimizing debt, you lay the groundwork for long-term financial security and peace of mind.
The extent to which you dedicate your time and energy to these four things will largely determine your lifetime outcomes. The greater the extent to which you keep to them, the less you will rely upon luck or the generosity of strangers for your current income or lifetime outcomes.
The flip-side is also true. If you let these four things slide, you won’t be as happy in your life and career, you will need more luck, and you will depend on the kindness of family, friends, and strangers for your future well-being.
If you ever find you have taken steps down the wrong path (whether it is one year after graduation or ten), then stop walking, breathe deeply, turn back around, and begin again.
Most of us begin again three or four times before we really find our place.
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