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Many basic principles about saving and investing don’t change. But plenty of other things do, including the economy, tax law and employment trends. So we asked leading personal finance experts to share with us the best money advice they ever received, as well as what they would tell today’s new graduates.
Here are their responses, edited for length and clarity:
Michelle Singletary (photo courtesy of Michelle Singletary)
Washington Post personal finance columnist and author of “The 21 Day Financial Fast: Your Path to Financial Peace and Freedom”
The best advice I’ve ever gotten came from my grandmother, Big Mama. She told me to save money from every paycheck. Every. Single. Paycheck.
So, from the time I was 14 and earning money tutoring, I’ve saved something from every check I’ve gotten. Saving is so automatic for me I don’t even know how not to save.
What I’d tell new grads now is: The first day on your full-time job after graduation, sign up for the retirement workplace plan if there is one. If your job doesn’t have a retirement plan, open an investment account and get a low-cost growth index fund.
I know. Retirement is so far away. You figure you have time and those student loan payments won’t pay themselves. I get it. But what you have, we older folks would kill to have back. You’ve got time on your side and that’s better than any great stock tip.
Author of several New York Times best-sellers including “The Automatic Millionaire”
The best advice I’ve ever gotten was “You’re never too young to invest.”
At age 7 my grandmother Rose Bach taught me how to invest by buying stock in McDonald’s, my favorite restaurant in the world at the time. Grandma Rose said, “You can work here and make minimum wage (hard way to become rich), you can eat here and spend money (that’s what you’re doing now) or you can own the place and make money from all your friends and everyone else who eats here. Investors get rich.” She taught me how to look up McDonald’s stock symbol in The Wall Street Journal and then walked me down to a brokerage firm and helped me buy one share. I’ve been investing ever since. It’s made me financially free for life.
What I’d tell new grads now is: Start young, find your “Latte Factor,” invest it — you can become rich.
The Latte Factor is a metaphor for how we spend small amounts of money on little things. That daily coffee that 5 million Americans (maybe you) will go have today at Starbucks that costs $5 a day could make you rich. Make the coffee at home for 25 cents or have the free coffee at work. Then invest the $5. Put that money into an index fund (say any S&P 500 fund).
If you like Starbucks coffee, fine. Drink it and invest in the stock.
Kathy Kristof (photo courtesy of Kathy Kristof)
Editor of SideHusl.com and author of “Investing 101”
The best advice I’ve ever gotten was, “Spend less than you earn.” It’s ridiculously simple, but it helps you at every stage of life. When you’re just getting started, it helps you build savings and get out of debt. Later, it helps you accumulate the down payment for a house; afford to take time off, when you have kids — or when you want to travel or take a sabbatical. Later, savings will allow you to retire when you want — or tell a bad boss to get lost; you quit.
What I’d tell new grads now is: Get a job — even if it’s not your dream job. It doesn’t have to be a great job. It just has to be one where you have a boss, who will be willing to give you a recommendation when you want to go on to something more serious.
Realize too that almost any job will teach you a few key lessons about work that will help you everywhere. Namely, half of the game is showing up on time, with a good attitude and appropriately dressed. If you listen, pitch in, apologize (and fix the problem) when you make mistakes, and show respect to your colleagues, they will be in your corner when you need them.
Kristin Wong (photo via Kristin Wong)
Author of “Get Money: Live the Life You Want, Not Just the Life You Can Afford”
The best advice I’ve ever gotten was from my mom, who is a master saver. When I was a kid, she told me, “Every dollar counts.” She came to the U.S. with nothing and somehow managed to save $10,000 in just a few years working a minimum wage job at a grocery store.
I do think there’s such a thing as being too frugal, but the greater lesson here is to focus on whatever you can do to improve your financial situation. Small moves can lead to great change.
What I’d tell new grads now is: Value your work and always negotiate job offers. When I got my first job out of college, I didn’t feel like I was in a position to negotiate because I had zero experience and I felt like I was lucky just to get a job. While that was true, I still had valuable skills that I learned in part-time jobs and other college activities. Anyway, in most cases, it doesn’t hurt to ask. And not only that, it sends a message to your employer that you are a confident employee who brings value to the job.
CEO of AskTheMoneyCoach.com and author of “Perfect Credit: 7 Steps to a Great Credit Rating (2nd edition)”
The best money advice I ever got was from my sister, Debby: “Always bring your A-game and then ask for what you’re worth.”
That was her way of telling me to strive for excellence, be the best, and then not blink an eye when making salary and pay requests. It’s advice that’s served me so well over my career, both when I was a full-time financial journalist and had to negotiate pay raises, as well as the past 15 years as an entrepreneur when I’ve had to set my business rates and fees with clients. I feel like young women, especially, need to hear that advice and take seriously the message about the importance of negotiating from a position of strength. Your starting salary right out of college can have a big impact on future job/career offers.
What I’d tell new grads now is: Don’t wreck your credit! Poor credit can hurt your job prospects since many employers now do credit-based employment screening to determine who to hire and promote. Sadly, there are way too many opportunities for young adults to damage their credit rating: by paying bills late, overspending on credit cards, applying for too many bank or department store cards, and so on.
Founder of phroogal.com and author of “You Only Live Once: The Roadmap to Financial Wellness and a Purposeful Life”
The best money advice I ever got was to value my time more than money. Time is more valuable as it’s finite and once spent cannot be earned back. Money, however, is infinite and can be created and earned in many ways.
For a very long time, I believed the only way to earn more was to work more hours to show my managers that I deserved the extra $0.50 per hour or the 3% annual merit increase. But the more skilled you are, the more valuable you become, meaning employers will pay a premium for you. So use all your employer benefits such as tuition reimbursements, cross-departmental projects, and workplace seminars and classes. The investment of your time to becoming a master in your profession will reward you with promotions and higher salaries much quicker.
What I’d tell new grads now is: Resist the temptation to spend all that you make, and be mindful about lifestyle inflation. That’s when your spending increases at the same rate as your income. Lifestyle choices creep upward and are sticky. If left unchecked, that may lead to living paycheck-to-paycheck without an extra penny to save for future expenses or retirement.
Author of “Broke Millennial: Stop Scraping By and Get Your Financial Life Together”
The best money advice I ever got was that debt reduces your options. It’s not the most helpful advice for recent college grads who already have student loans, but avoid incurring any more! Don’t let lifestyle inflation put you in credit card debt, because what it ends up doing is just limiting your opportunities. Being debt free, especially free of consumer debt, positions you to be able to quit a steady job and join a startup or build your own business or [insert any dream here].
What I’d tell new grads now is: Ignore the “5-year plan.” I’m a classic Type A overplanner, but the job I do today is nothing I would’ve envisioned myself even being capable of doing when I graduated in 2011. So don’t stress about the silly interview questions like, “Where do you see yourself in five years?” and instead be open to the wide variety of possibilities, and don’t be afraid to take risks early on.