My Advice for College Grads

Ah, graduation season is upon us! College grads from all over the country are seeing their hard work rewarded with the coveted degree. Whether is an associate, bachelor’s or an advanced degree, all signal a significant accomplishment. But as soon as the celebration wears off, and perhaps they’ve taken some time off to decompress over the summer, these graduates will be getting their first taste of the professional job market. For most, they will be faced with a new level of financial independence and responsibility to adjust to.

While this is clearly an exciting time, many grads feel a sense of trepidation about next steps. One common concern is, who will hire me without any real-world job experience? How do I get job experience if no one will hire me without it? Once I do get a job, what else do I need to know as a true adult? I had these conversations with my oldest daughter, Maeve, when she recently graduated nursing school, so this is not new to me. I’m sure Phoebe and Sophie will face similar questions once they complete their schooling as well.

Now Maeve, she was lucky – part of her schooling involved being an unpaid intern at local hospitals, so she had a leg up on those in other career tracks. Her school, like some other colleges, included options for on-the-job training and internships so she graduated with some real-life experience. But while this experience is extremely valuable, it doesn’t provide an automatic guarantee of a job, especially if you’ve graduated in a field with a lot of competition.

So with our time this week, let me share some retirement planning education I gave to Maeve to help build her confidence in this new phase of her life.

For starters, I recommended that she hone in on those skills that don’t require experience in a specific field. For example, focus on the things that take no experience to demonstrate. Things like being on time, your effort, energy, and attitude. Pay attention to your interpersonal skills. Learn how to provide value in any situation by offering solutions instead of discussing problems. These are all things that take zero work experience but are valuable to any employer.

New grads should also prioritize building a strong professional network through industry events, alumni connections and professional associations. A strong network can offer valuable mentorship, job leads and collaboration opportunities, helping launch their careers by providing new experiences and connections. College gives you a baseline for learning, and the workforce will give you actual practice.

And of course, those entering the job force today need a good grasp of technology, as it’s used more than ever for most careers. Luckily most colleges help prepare and train students in some of the technological solutions they’ll face in their careers, but it’s crucial to being curious about and receptive to new systems and tools as they evolve.

Once you find your first “real” job, the learning doesn’t end there. You have many life lessons ahead of you still. As Maeve and I discussed, it’s time for her to be - and act - like an adult. While Jill and I will always have her back and be there to support her, her mindset will change to being her own primary caretaker and advocate. This means taking care of herself physically, emotionally, and yes – financially.

For many, this means tackling student loan debt. According to information from the College Board, 54% of bachelor’s degree students who attended public and private four-year schools graduate with student loans₁. The best thing you can do for yourself is start actively paying that down. For example, set up payments on autopay each month. This will set you up for good credit. You also need to understand how credit scores work, including the difference between a hard and soft inquiry on your score.

It’s also hugely beneficial to learn how to budget and save now, and even start saving for retirement. A lot of people don’t realize that until they’re in their 30s and 40s and wish they had started sooner. The sooner you start saving for things like your retirement or college for your kids or whatever it may be, the more compounding will do the work for you. I suggest you starting putting aside even a small portion of with your first paycheck if you can, and then consider increasing those savings as you get raises throughout your career.

Another thing Maeve and I reviewed in detail were her company benefits and how to make the most of them. If your company offers a retirement plan, there’s often an employer match. That’s free money so you always want to be contributing at least enough to your 401(k) to take advantage of the full match. I advised Maeve to start at 10% into her Roth 403(b) and increase it every year to hit her max in five years.

A Roth IRA can be a great investment option when you’re younger, too. In 2024, you can contribute up to $7,000 to a Roth IRA. Investing in a Roth when you’re younger can be valuable not only because of the effects of compounding but also the fact that you’re usually in a lower tax bracket when you’re first starting out in your career. This can be a good time to make after-tax contributions, and then qualified withdrawals in retirement are tax free.

At the end of the day, we need to remember that life goes by so quickly. Heck, I cannot believe that this year is my 30th year graduating from Mass. Maritime. You know, college grads enter today’s world with great knowledge, skills, and drive. By educating themselves on how to successfully transition to the working world, they can use their marvelous gifts to create the life they deserve.

So as always - be vigilant and stay alert, because you deserve more!

Have a great week.

Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, and Mansfield, MA. Insurance offered through its affiliate, CutterInsure, Inc.

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