Preparing For Life Beyond College
Tyler is a college student with a full scholarship. He should graduate with no debt and wants to know what he needs to do right now to utilize what money he does earn.
QUESTION: Tyler in Kentucky is a college student with a full scholarship. He should graduate with no debt and wants to know what he needs to do right now to utilize what money he does earn. Dave advises Tyler to pile up some cash in order to prepare for the transition from college life to adulthood.
ANSWER: I think our first goal is to be 1,000% sure we’re graduating and that there are no money issues in the way of that. The second goal is to have the cash to make the transition into your life after you graduate. Transition might be a city change because you might take a job in a different city. It certainly will mean setting up housing in a different location—an apartment, utility deposits, those kinds of things. It takes cash to make that transition. Also, you may be moving to a city where you think you’re going to get a job but you’re working the not-career job while you’re waiting on the career job. It takes money to kind of sit and have patience. So you really can’t have, on the short term—short term being six months after you graduate—too much cash.
I would simply say let’s see how big a pile of cash we can put in savings. That ensures that nothing gets in your way, money-wise, of graduating. That gives you the grease for the gears on the transition and helps you change gears. Then when you’re settled in to the new career job, let’s just be bizarre. Let’s say you had $50,000 in savings. That’d be wild, wouldn’t it? But it doesn’t hurt anything for it to just be sitting there and make sure those two things happen—graduation and transition. Then when you settle in to the new job, then you can think about doing something with that money longer term, because you know you’re not going to need it then. You set some of it aside as your emergency fund, and the rest of it you could begin to invest, think about buying a home, or think about investing in Roth IRAs and those kinds of things.
Your best investment right now is in making sure you finish school and making sure that transition goes smoothly, because when you come out of school, if you’re broke and have no savings, you end up having to take a job that you might have otherwise walked from because you’re desperate. The less desperate you are, the choosier you can be. That money gives you that margin. I’d pile up as much as I can pile up and just nothing sophisticated—just a simple savings account and just know that’s your patience money. That allows you to have patience to get transitioned and to get into the big career job.