Congratulations! You are finally starting your career. Time to get adulting. You are now equipped to earn money and build a livelihood. For those of you trying to figure out how to start off properly, here is my financial advice for grads.

But graduate school did not prepare you for all of the decisions that you face at the outset of your new job. There’s also the matter of getting yourself and your household started on down the path to financial stability. The time to start is now.

Note that I am not a financial planner, and this is not being conveyed to you as personal financial advice. This is an opinion essay in which I describe my own personal views and choices, which may be different from yours.

Here are a list of things to start doing now:

Budget & Monitor Your Money

Your first step is to ensure that you plan and monitor your financials. You should create a budget and monitor the money going in and out of your account. I use a program called Quicken to budget and monitor my money. When I was younger and poorer, I relied on Mint.

Health Insurance

Given that this post is intended for college graduates in the year 2021, I assume no one reading this needs to be convinced of the need for health insurance. You need health insurance, especially in the United States. Young people have accidents and young people get sick. In this country, just getting a diagnosis to see if you are sick can cost thousands upon thousands of dollars. This country’s healthcare system will ruin you if you need medical care and don’t have insurance, or worse yet deny you the healthcare that you need.

Long-Term Disability Insurance

Disability can be financially catastrophic for households. If you become disabled to the point that you are unable to work, and if you have a history of paying Social Security taxes, then you may be eligible for modest welfare payments from the federal government. These payments are extremely small compared to the income received through high-skill work. This means that you and your family will face the need for massive living adjustments, and possibly a large loss in living standards.

Long-term disability is a private, supplemental insurance that will make additional payments to you if placed in a position where disability prevents continued employment. At CUNY, it will replace up to 60% of your income. A loss of income may be unavoidable, but this kind of replacement mitigates the extent to which you will be forced to make financially-imposed life changes.

I use this insurance to mitigate the risk of a major, long-term disability. As such, I chose a plan that would offer long-term payments. To save money, I settled for a longer waiting period before payments started kicking in. For shorter spells in which health problems prevent me from working, I would rely on medical leave, personal savings, and, if you are fortunate enough to have it, spousal, family, or peer support.

If you do not have economic dependents, then this insurance is probably more important than life insurance.

Life Insurance

The purpose of life insurance is to blunt the impact of your death on any people who are economically dependent on you. If you are bound to other people in a household unit, then your death not only represents an income loss, but also the loss of the services you provide.

Sure, the household could scramble to replace your income and service stream. However, you would empower those that you leave behind by leaving them the money that you would have earned. Doing so makes sure that economic pressures do not force your loved ones to move, enter relationships, change schools, or forego something else important (or at least limits the need for such an adjustment).

If you have children, I recommend getting the maximum life insurance coverage offered by CUNY. Remember: that money has to pay off the mortgage, help with college, and compensate for the spending money and savings that you would have been contributing. Yes, it is pretty expensive, but, in my opinion, it safeguards things that are more important to me than the things I might consume or invest with that money.

Retirement Savings (401k & IRAs)

When I first came to Queens College, the senior professors implored me to start saving for retirement aggressively, especially with the 401k. You are insane if you are not making the minimum payments to qualify for CUNY matching contributions because you are basically just saying no to thousands of dollars in income. Beyond that, I am a strong believer in maximizing your retirement contributions, and then building a life around whatever money remains. There are several reasons to save for retirement aggressively:

What about 529s?

I put some money in 529s, in part because it can be deducted from New York income taxes and New York’s 529 plan has nice investment options. That being said, I do not save aggressively in these vehicles because there are limits to what I will spend on college. I want my kids to go to Canada for university, and you only need to save so much if that is your plan. So I might not be the best person to comment on this one.

Additional Advice

Financial planners recommend that you try to build cash or near-cash holdings that are equivalent to six months in expenditures. The idea here is that, if you are faced with a financial shock, you will not have to liquidate investments.

Should you buy or rent a home? It depends on several factors.

As you accrue assets and as your family may require other forms of insurance to protect your assets. You will need to look into things like property and liability insurance.

That’s my financial advice for grads. Your future self will thank you.

Photo Credit. By pixabay free images – https://pixabay.com/photos/money-money-tower-coins-euro-2180330/, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=88247655

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