Timely Money Advice: The Graduation Speech No One Invited Me to Deliver (But Every Kid Needs to Hear)
Money Advice Every Graduate Should Know, Straight To The Point, No Sugar Coating, Because The Situation Is Dire And We Don’t Have Time To Wait.
As graduation season winds down, one thing is very clear. No one invited me to give a commencement address at their high school, college or university. Never one to let a little thing like lack of an invitation stop me…I went ahead and crafted one anyway.
The inspiration for this speech, was watching a young woman who means the world to me, my mentee, Jaz, proudly walk across the field to accept her high school diploma. She has overcome a number of challenges life has dealt her through no fault of her own, and also learned to navigate and get her self back on track after a few questionable decisions. She is truly an amazing human destined for great things, aiming to put her love of social justice and community at the forefront as she studies at our state university in the Fall.
Although I see tremendous promise in her and her fellow graduates, I am also scared sh@$less. Why? Because the majority of kids, Jaz included, have no sense whatsoever on how to build a financial foundation that will keep them out of debt and financial despair in the future.
Blame the schools for not teaching it, their parents for not instilling it in them, or our consumerism culture for bombarding them. Doesn’t matter who we point the finger at, this country has a HUGE problem and the best way to break the cycle is to start with our youth. Educate them now on how to AVOID financial mistakes in the first place, instead of having to figure out how to dig themselves out later.
As graduates prepare to launch into adulting these life lessons are a must. If you know someone at this critical stage, please share with them. And let them know, these are not lessons just for today, next month, or next year, these are LIFE lessons and should be habits we practice throughout every phase of our life.
Money advice every graduate should know, straight to the point, no sugar coating, because the situation is dire and we don’t have time to wait.
1. The road to financial freedom starts when you’re young.
Even if you don’t currently have a dime to your name. Start saving NOW.
2. You are in charge of your own prosperity. It’s up to you to define what it means to you.
By the time you’re 18, you probably have some ideas about what you want your life to look like, maybe its the car, house, clothes or vacations. This is great! It’s really important that you have a vision for what living richly means to you. Get really clear with yourself about what you want your material life to look like, visualize it, see yourself in it, then figure out how you’re going to get there. What job would it take to support this lifestyle? Will it be a job you’ll enjoy and gain satisfaction from? Will it allow you time to enjoy non material things such as family time, friendships, hobbies and serving others?
You’re about to embark on what’s know as the accumulation phase of your life. Make no mistake, it’s not an easy phase. You’ll be best served working a steady job and sacrificing now for that vague concept of “future you”. I’m aware that foregoing joy now in hopes of a happier future is a tough sell.
However, the reason its so important to define the type of life you want to live, now and in the future is you want to make sure you’re cultivating a life that will bring you fulfillment now and when you retire.
Plenty a person has spent money willy nilly in their younger years, with no thought about their future selves. And then they figure out in their 40s that the FIRE movement really speaks to them and they’d love to retire before they’re 50….sorry, that ship has sailed.
So take time and ask yourself these key questions:
- What makes me happy in the short term? Identify the experiences, activities, values and possessions that genuinely bring you joy.
- What will make me happy in the long term? This includes both monetary and non-monetary goals. Your aspirational goals should focus on how you most enjoy spending your time and money and be broken down by life stage as they can change over time.
Now that you have your own unique definition of prosperity and living richly, you can follow a career path that will lead you there. Don’t go into medicine or running a restaurant if you value loads of family time and a flexible schedule. If you value flexibility and freedom, look for remote jobs allowing you to see the world and save money while living in countries with low cost of living.
Check in with yourself often to make sure you’re still on the right path to get you where you want to be.
3. Live below your means.
Take the time to understand the difference between needs and wants and spend more on your needs than wants. It is the cornerstone of prosperity, inner peace and financial freedom.
Right now you may be finding it difficult even to meet your needs, all the more reason to adopt this philosophy. Jaz said she couldn’t wait to buy a car to have freedom to visit her friends when she wanted, ride to her job instead of walking. I helped her calculate how much that ‘freedom’ was costing her now and how much it would cost her future self. She sold the car and no longer has to worry about gas, insurance, registration, maintenance and everything else that makes having a car feel far less like freedom. Public transport and the occasional Uber saves her hundreds, which, if invested, gains her more over time.
This is the time to get creative on how to make your money stretch. I look back on my youth and think the most fun I ever had on trips with my friends was when we were broke and had to make 100 bucks last the whole week of Spring Break.
Get creative on how to stretch your money. It’s not just boredom that begets creativity, brokedom does just as well.
And…never, ever get a credit card. It’s a guaranteed path to working decades longer than you need to pay off stuff you no longer have. As a former banker I employed a number of evil tricks to young grads like yourself to get a card for “emergencies”. It’s all BS. You’ll pay twice as much interest than you did to buy whatever shiny object you feel you ‘needed’. Debt compounds like a curse and before you know it, you’re drowning in debt and a slave to your job. You can’t quit or try a new career because you have “bills to pay”. So get crystal clear on spotting the difference between needs and wants.
As you get older, ignore what any bank tells you that you can “afford” to borrow for a car or a house. Every dollar you don’t borrow is a dollar (plus interest!) that you can invest and put toward other goals.
Remember, money is NOT the key to happiness. But overspending, debt and financial insecurity is absolutely the key to despair.
4. A Rich Life cannot be measured by income and net worth.
The secret to finding happiness is having a lifestyle with FREEDOM and FLEXIBILITY. You can be rich on any salary if you’ve created a life where you can do the things you enjoy, when you want to do them.
A focus on future FREEDOM is what can protect you from indiscriminately increasing your spending as your income grows. Sure, as you make more, you can indeed spend more, but the goal should still be to right-size your spending and build financial security in the long term.
Why? So you never have to feel financial panic, so you’re never tied to a job you can’t leave, so you can retire when you’re financially independent, rather than waiting another 45+ years.
Buy the smaller house that meets your needs. Aim to keep driving the car rather than trading it in for something shinier. Use debit, not credit. Every time you’re tempted to buy something, calculate how many months or years of work will it cost you down the road and see if its still worth it.
Living below your means is the gateway habit that sets you up for financial success for the rest of your life.
A rich life full of freedom, family and friends…that’s what I wish for each and every one of you.
LIVE RICHLY. FIND HAPPY.
Kathleen McDowell is an investor, writer, and money coach. She shares how to build wealth and reach financial freedom for the sole purpose of having the ability to live a rich life ON YOUR OWN TERMS and SPEND TIME ON WHAT MATTERS MOST.
Find out more about Living Richly at Live Richly.
What does Living Richly mean to you?
It’s never too late to teach your kids about money!
