"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery." - Charles Dickens
Wise words! Learning to live responsibly within your means can be a challenge, and it can also be very empowering. Many college students are all-too-familiar with debt, whether it be credit cards, students loans, auto loans, or otherwise.
As you make your transition away from college life, we encourage you to start developing your own, individualized plan for managing your finances. It is important to understand how much you need to support yourself, so that you can make informed decisions regarding salary offers and negotiation.
One of the best places to start is to create a monthly budget. You can download a sample budget here. Another very popular resource among recent graduates is Mint.com, which is a free, online budgeting and financial planning site.
The earlier you start saving for retirement, the better off you'll be. For example, if you consistently put $300 per month into an account that yields roughly an 8% return (e.g. a moderately-aggressive money market mutual fund), starting at age 22, your yield by age 62 would be $1,047,302! By comparison's sake, starting at 32 would lead to a yield of $447,108, and at 42 a yield of only $176,706. That's a big difference.
Your employer may also offer a retirement plan (e.g. 401k, 403b) that provides another opportunity to start contributing to your retirement at an early age. Many employers offer matching contributions programs, where they will match however much you put in, up to a certain percentage.
It may also be a good idea to talk with a financial advisor about opening a Roth or Traditional IRA.
It's never too early to start thinking about your financial future, and there is a wealth of resources available to you, in-print and online, to help you get started. See the references below for further exploration into the subject.
Grossman, J., Hanvey, D., Kreitl, B., Lloyd, K., Van Dyke, J., Paley, L. B., et al. (2009). Ready or Not: The Art and Science of the Job Search. Bloomington, IN: Trustees of Indiana University and the Indiana University Bloomington Career Development Center and Arts & Sciences Career Services.
Tyson, E. (2006). Personal finance for dummies (5th ed.). Hoboken, NJ: Wiley Publishing, Inc.
Kobliner, B. (2009). Get a Financial Life: Personal Finance In Your Twenties and Thirties. New York: Simon & Schuster.
Opdyke, J. D. (2006). The Wall Street Journal. Complete Personal Finance Guidebook. New York: Three Rivers Press.