My Best Advice for College Graduates

 

Since I have taught at two colleges before the age of thirty, I often stay in contact with my former students. Periodically, our conversations lead to life after school and what they should strive for in their own lives. In one conversation, a student bluntly asked, “What is one piece of advice you can give me before I start life after college?” Without missing a beat, I said –“Open a Betterment account to start building a savings/investment plan.”

Wait, what?!

No “practice daily” or “email 5 people a day to build a network” or “take a lesson with so-and-so”?

Correct. My best advice for anyone graduating college is to start saving and investing your money now.

Here’s why (Disclaimer – I am not a financial advisor. Speak with an expert who is qualified in these matters. I am only speaking from personal experiences):

In college, you are most likely broke, and the average music student does not get a job related to their field right away. If performing is your thing, you will be looking to break into a music scene somewhere. With this newness to your life, something should be consistent. You will be spending money and purchasing MANY things when you first get out of college. If you are not already used to these items, you’ll have rent, student loans, food, car, students loans, insurance, as well as money going toward music-related items and literally ANYTHING else you could be needing to be a genuine adult.

Did I mention student loans?

By the end of it all, you may not have anything left. When you sit down to do your finances, you probably would say you have no way to budge for saving, and that you will have to wait til you have “enough” to put toward savings. Here’s where that is the wrong idea. In general, the more money you make, the more you will have to spend or find ways to spend. It is an unfortunate (and too common) fact of life, too many people are in way too much debt and have no plan for saving their money.

Where I think differently is if you start to save when you have “no money” you begin to teach yourself about saving a little amount so when you start to receive that steady larger income, you already have a plan set in motion.

Here’s what I have literally done for the past few years.

My wife and I actually have two ways of saving and investing money. When we started with Betterment, we would put money into our Betterment “Build Wealth” account and tried not to touch it. At first, I wasn’t good about it. I would deposit money into the account and would then add more at certain times. When my checking account would get a little low, I would pull from Betterment.

This is where I went wrong because I wouldn’t allow the money to grow. Sometimes, saving money is putting it aside and NEVER TOUCHING IT and I mean never. Enter auto-deposit. Every two-week pay period, $100 now automatically goes into Betterment without me really checking it. Overall, I know the money is growing even if the market fluctuates day-to-day. (And yes, taxes are paid on the Betterment account).

Since I want to set aside as much money as possible, the second place I send money is in a savings account with my local bank. By putting away money, I am still saving but have a place to quickly pull funds if needed. The local bank savings account is where I can touch money if necessary. I have this account set on an auto-deposit of $50 a week and will adjust this number if necessary.

A total of $100 a week is being saved or invested. So let’s do the math – 100 x 52 is $5,200 a year. Yes, it may not sound like a lot but that times 10 years = $52,000. And this is only if I keep doing the exact same thing with my life that I’m doing right now. I plan for my weekly deposit amount to go up in the future.

Saving or Investing – Where Should I Start?

Even though I started with Betterment in 2015, I’ve actually been saving since 2008. Here are some of the companies that I have used for saving/investing. I would recommend any of these (again, I’m not a Financial Advisor):

• Betterment (my current investment company)
  • A robot-advisor for online investing
• Ally Bank (1.45% Annual Percentage Yield)
  • The typicalsavings account has an APY of 0.03% or less. Ally Bank is dollars in interest compared to other banks’ pennies.
• Motif Investing
  • An investment company that allows you to invest in trending themes.

Here are also some financial resources I have used currently or in the past for keeping track of my finances:

• Mint.com
  • A FREE money manager that lets you keep track of finances and allows you to set budgets for spending.
• Personal Capital
  • An online financial advisor and personal wealth management company similar to Mint but with more bells and whistles.

Please don’t be intimidated by all of this information. It is really easy to start doing this. It can literally take 5-10 minutes to set up. By starting to save a little right now, you are setting yourself up for better success and financial security in the long-term.

(By the way, that student – a year later – thanked me for giving this advice and expressed her excitement to me with how much she has saved so far.)

Are you a musician that has used some of these (or similar) products and services? If so, comment below.