Advice from Michelle Singletary:

Since a lot of personal finance advice doesn’t change — even when the nation is freaking out about the possibility of a government default — I like to revisit the advice I often give to new high school and college graduates.

Poet Ralph Waldo Emerson complained that students aren’t taught basic life skills: “We are shut up in schools and college recitation rooms for 10 or 15 years and come out at last with a bellyful of words and do not know a thing.”

How true that statement is, especially as it relates to money.

Here are some basic yet vital tips to help young adults keep their debt burden down and their net worth climbing.

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Don’t get used to the grace period for your loans

If you’re graduating college with student debt, don’t wait until you have to start paying back the loans (typically six months after graduating for federal loans) to figure out what you owe.

The grace period is a time to practice. You need to feel the pressure of how those payments will affect your monthly budget.

For whatever time you have before the payments kick in, put that monthly amount in a savings account. Get used to how it feels to have less to spend because of the loans.

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Don’t believe people who say there is good and bad debt

Referring to debt with an adjective is unhelpful. It’s just debt, and it all can be destructive if overused and too oppressive.

At a Berkshire Hathaway shareholders meeting, billionaire Warren Buffett was asked by a 14-year-old what financial concepts he would give young people who still have time to implement them.

Buffett, one of the most successful investors in the world, didn’t talk about how to pick the right individual stock, as many might have thought he would.

His first tip was about avoiding debt.

“If I had one piece of advice to give to young people, you know, across the board, it would be just to don’t get in debt,” Buffett said.

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Don’t just focus on the monthly loan payment

Always look at the totality of what you’re borrowing. And by that, I don’t just mean whether you can handle the monthly payment and the interest you’re being charged.

What will that loan cost you in the long run?

Consider what else you could do with that money if you weren’t servicing debt all the time.

If you borrow too much for a car, that’s money you can’t invest. If your mortgage is too high, overextending your budget, you can’t build an emergency fund for when life happens.

Read more tips from Michelle here, and skip the paywall with email registration here: https://www.washingtonpost.com/business/2023/05/31/money-tips-new-graduates/?utm_campaign=wp_main&utm_medium=social&utm_source=reddit.com