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If you know of anyone about to graduate high school, make sure they read this post. I wish someone had referred me to a post like this or given me the advice I am about to give when I was graduating high school.

Graduating high school will be among one of the most exciting moments of your life. You no longer have to deal with teachers or your parents treating you like a child. You are now eighteen, or about to be, and you are about to make the important step towards being an adult. You may think all of your troubles are about to be over and you will be able to do whatever you want to do. NOT SO FAST.

Being an adult is not all it is cracked up to be. Being an adult means you have to be financially responsible. Mom and Dad should not have to bail you out. Financial issues are one of the biggest problems of being an adult. You have to work and pay the rent/mortgage, utilities, insurance, car payments, student loans, etc.

You, recent graduate, can make it easier on yourself when you venture out into the real world. You are currently in a unique position. You probably have no debt and maybe a little bit of money saved from a part-time job, graduation gifts, parents and grandparents, etc.

Here are 3 tips to help you make a smooth transition into financial adult life:

1. Save, Save, Save. It may seem boring or it may seem uncool but it's important. If you get $20, save $5. It doesn't matter that it is only $5. Every little bit helps and it does add up. If you start this habit early, it will help you out tremendously in your adult years. Plus, having a nice fat savings account means that when you are early in your career, you can still go out and have fun instead of worrying about how you are going to pay the bills.

HSBC offers an free online savings account. No fees, no minimum balance. **

2. Student Loans.
If you are going to college and have to take out student loans, ONLY use the amount you need. If you have extra money left over after paying for the necessities and basic living expenses, save the rest (see Tip #1). Just because you have it, does not mean you have to spend it. They will give you more than you need and while it may be cool at the time, you eventually have to pay it back. I graduated college when I was 22. Here I am at 31 and I am still trying to pay off my student loans.
I know there are some student loan programs that do not require repayment but we won't go into that here. I still think the "take only what you need" motto still should apply.

3. Credit Cards.
Some people say don't get one, some people think you should get one. I think you should get one. You will most likely need credit to buy a home or car once you graduate college so it is best to build your credit early. Getting a credit card in college, with a small credit limit, will help you once you graduate college. Having good credit out of college will make easier to rent that first apartment, get insurance or when a potential employer pulls your credit for a job.

If you choose to get a credit card, here are the rules:
  • Pay your balance in full; never pay interest.
  • Pay your bill on time.
  • Never go over 40% of your credit limit.
  • Don't charge more than you can pay. If you don't have the money to pay the bill in full by the time the bill comes, don't charge it. Go back and see tip #1.
**Tip: Discover Card offers a credit card especially for students. **

Note: Using a credit card requires responsibility. If you don't think you will be responsible with a credit card, don't apply for one. It doesn't matter if they give you a "free" t-shirt. The free t-shirt could cause you years of financial stress.

You may think I am just another adult spouting off advice but trust me, I know what I'm talking about. I made ALL of the above mistakes. I wish someone had told me about the three tips above when I started college. I am still working on getting rid of the mistakes I made in my college years almost ten years later. I regret all of the fun things I didn't get to to in my early twenties because I couldn't afford it. I screwed up in college financially and I had bills to pay. Every paycheck went towards bills and there were a lot of nights I had to stay home and watch television while my friends went out and had fun.

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  1. Jeff@StretchyDollar // May 11, 2009 at 1:18 PM  

    This is great advice. I wish someone had directed this to me when I graduated as well. Getting an early start on finances is great.

  2. StephaniePTY // May 11, 2009 at 1:38 PM  

    Great article! I'm definitely going to post it to Facebook, where I have a few friends that are still in high school.

    Here's a link that may help: it's a calculator that let's you see how much you can reasonably take out in student loans, based on your expected after-graduation salary.

    Let's just say, I wish I had used that calculator before going off to college!

  3. Single Guy Money // May 11, 2009 at 8:37 PM  

    Thanks Jeff and Stephanie

  4. John // May 12, 2009 at 8:59 AM  

    It is great advice and great post. Someday ago I also write the topics like this. But I think your article more complex and more informative

  5. Jonasan // May 16, 2009 at 11:04 AM  

    Good site. I will recommend this to my cousin that recently graduated. She should learn all of these to avoid all the mistakes I have. Because I wasted about 10 years of my life spoiling money and recovering from it, I made a site about financial savings.

  6. MoneyEnergy // May 16, 2009 at 7:30 PM  

    These are all good points. I especially like "Just because you have it, does not mean you have to spend it."

    That holds true for all points in life. Not all money is meant for spending. Some is meant for GROWING.

    And of course, it's ok to make some money mistakes. Don't be so afraid that you never spend anything, because this can hinder other aspects of your life, too.

  7. Rajeev SIngh // May 17, 2009 at 2:58 PM  

    I think while taking credit card for having a good credit score sake, one needs to be extreamly cautious . Credit cards tend to encourage unnecessary purchases and extravagance and thats certainly not what you want to start your life with.

  8. Kate // May 20, 2009 at 4:31 PM  

    Great advice! It sounds a lot like the stuff my dad told me and I sure am glad I listened to him. In addition to SAVE SAVE SAVE, I would also add in, open your IRA as soon as you turn 18. Nothing says THE POWER OF SMALL quite like compound interest.

  9. Karen, author of "My Funny Dad, Harry" // May 22, 2009 at 4:30 AM  

    This is good advice here, not just for college students, but for anyone. I am glad I always paid off my credit cards completely every month so avoided credit card debt. I think that's your best tip, other than saving if you can. I learned to save early in life as a kid, saving half my allowance each week. (Wish I could still save half my pay--I do if you count my 401k contributions as savings, I guess.)

  10. Rick Vaughn // May 23, 2009 at 8:54 PM  

    I second all point made here. Although, I do you think you should have fun in school. Blowing up credit card is a lose, lose game. Get a part-time job if for anything to have fun without the debt.

  11. Lindsay // May 25, 2009 at 1:16 AM  

    I did the army route to pay for school, and while I'm not sure it's for everyone, I know I'm in a much better place financially than many of my friends who are still struggling to pay off student loans.

    The one thing I wish someone had told me is to learn an actual trade skill, perhaps not instead of but in addition to taking the traditional four-year-college courses. Just in case folks like Geralde Celente and Richard Heinberg are right and we're heading toward some rough times.