Letter to my 22-year-old self (30 financial tips)

To my 22-year-old self:

Congratulations — you’ve graduated from college! Strike a pose in your cap and gown. If you must, boogey down to 1991’s summer hit, “Shiny Happy People” by R.E.M. Then please humor me for a minute, as I’d like to share some wisdom from your – ahem – older, more mature self.

I’d love to steer you away from some of the silly financial errors my friends and I committed back in our 20s. Here are 30 tips, one for every day in your first month of post-college life. You might not appreciate the advice now, but believe me: you’ll thank me later.

(1) Prioritize debt. Don’t feel like you’re starting adulthood off on the wrong foot if you have school debt. (Graduates today an average of $33,000 in debt.) But make paying it off a priority on your financial to-do list.

(2) Especially credit card debt. Plastic hits hard, nailing you with a high interest rate, so you need to jettison any revolving debt ASAP.

(3) Pay your bills in a timely fashion. Late fees are costly and avoidable. Sign up for automatic bill pay to ensure all your payments arrive on time.

(4) Keep an eye on your credit score. This three-digit number has a huge impact on all your money matters, especially getting a loan.

(5) Resist peer pressure. Some of your pals will make more money than you, others less. Don’t let your friends coerce you into buying stuff you can’t afford – after all, real friends can have fun without spending a dime.

(6) Avoid racking up new debt. If you’ve dug yourself out of credit card debt, the last thing you want to do is land back in it. Only charge amounts you can pay for in full at the end of the month, or stick with cash or your debit card.

(7) Start saving for retirement. Your golden years feel a long time off, but take my word for it — one day you’ll be happy you started putting money aside young. TradeKing Advisors (plug for my company) can help you get started right. Answer a few questions online about your risk tolerance and goals, and we’ll recommend professionally managed portfolios that align with your needs.

(8) Brown bag it. Sure, a Chipotle lunch is delicious, but it’ll also set you back around $10. Spend that much on lunch just three times a week, and you’ll be out more than $1,500 in a year. Food for thought, right?

(9) Sign up for your company’s match. Many businesses offer a company match to their workers. All you need to do is have some of your pre-tax monthly earnings automatically withdrawn from your paycheck and deposited into a 401(k) investment account. Usually, companies give you 50 cents or $1 for every dollar you invest, up to a pre-determined percent of your salary. To put it more succinctly: FREE MONEY. Take advantage of it.

(10) Go paperless. Have your statement delivered to your inbox. It won’t get buried in junk mail (increasing the chance of missing the deadline), plus it helps save the environment.

(11) Live within your means. Your entry-level salary will put you on a more spartan lifestyle than the one you enjoyed when living with your mom and dad. But that won’t always be the case, I promise.

(12) Set goals. As Kit DeLuca says in the cinematic classic “Pretty Woman,” “You gotta have a goal. Do you have a goal?” Whether you want to buy a house in five years or pay off your school loans by your 30 birthday, establishing a financial goal makes you more likely to achieve it.

(13) Pay yourself first. Unfortunately, this isn’t as fun as it sounds. Rather, it means taking care of all of your financial obligations — rent, utilities, transit costs, savings — before splurging on extras.

(14) Don’t be scared of the stock market. Because of the Great Recession, many Millennials are fearful of investing their money in stocks. A healthy respect for risk is good, but an excess of caution will make meeting your long-term goals a lot harder. You still have long time before retirement and can afford to take some calculated risk that will hopefully reward you.

(15) Build an emergency fund. Unforeseen expenses can crop up, and you don’t want to be forced to use your credit card to pay for, say, new car tires. Start setting aside money each month in a savings account until you’ve stockpiled six to nine months worth of essential living expenses.

(16) Network. You never know who’s going to offer you your next job. Stay in contact with former coworkers, clients, and others who know your workplace skills. LinkedIn, Facebook, and Twitter make networking easier now than ever. (Just remember to keep your online profiles professional.)

(17) Develop good money habits. Put off saving now, and you may never get around to it later. After all, with age usually comes additional financial responsibilities, such as paying your mortgage or saving for your children’s college.

(18) Monitor your identity. Here’s an alarming stat that wasn’t true in my day: college students today are five times more likely to be victims of identity theft than other consumers. To help stay safe, keep a diligent eye on your credit report. (You can get it for free annually from annualcreditreport.com.)

(19) Don’t get sucked in by new technology. I get it — that new Apple watch is cool. Resist the urge to upgrade your devices immediately. I snagged that MicroTAC phone out of college for a small fortune. Wish I had invested that fortune in something longer-lived than a hunk of plastic.

(20) Negotiate your salary. Unfortunately, hard work doesn’t always speak for itself. So don’t be afraid to advocate for yourself and ask for the paycheck that you deserve. (Of course, be realistic.) After all, the higher your salary, the more your can save and invest for your future.

(21) Avoid the hedonic treadmill. If you outfit your new apartment with new stuff floor to ceiling all at once, you won’t appreciate any of it just a few months later.

(22) Open an IRA. Investing in the market can be uncertain, but having an IRA (either a Roth or a traditional one) in addition to a workplace retirement account can help to ensure you’ve saved enough come the days of gray hair and wrinkles.

(23) Embrace compounding. Once you’re debt-free, start investing. Thanks to the power of compounding, you could end up with a significantly larger nest egg than someone who begins in her 30s or 40s.

(24) Splurge on experiences. An expensive 3-D television will need to be replaced at some point, but the memories of your trip to Ecuador will last a lifetime.

(25) Know the costs. A good financial planner clearly discloses any fees associated with your investments. If you’re unsure, don’t feel dumb. Just ask.

(26) Take advantage of company perks. You might be surprised at the perks your employer offers to make life outside the office more affordable, such as a cheaper gym membership, discounts at specific retailers, or free entrance to local museums.

(27) Build credit. Making on-time payments and using a credit card (that you pay off in full each month) helps build your credit history. That way, when your hand-me-down Jeep dies a cruel and sudden death, you’ll not only be accepted for a car loan, but land a lower interest rate, too.

(28) Get in the habit of investing. The easiest way to build savings? Have money automatically withdrawn from your checking account and transferred to your investment account on a monthly basis.

(29) Dump the spendthrift significant other. He or she will probably entice you to spend more, and you’re more likely to have an unhappy relationship. According to a 2009 report, consumer debt increases your chances of fighting over finances and ups the likelihood of divorce.

(30) Finally, try to not stress. Freaking out about your finances isn’t going to score you any more cash, so don’t stay awake at night thinking about how low your account balance is. You’re young and have decades of earnings potential ahead of you.

You can do it! Just stick to these tips, and oh – maybe don’t buy those expensive acid-wash jeans.

Best regards,

Your future self (Rich Hagen)