8 Money Lessons for the Class of 2022

Congratulations, you made it, you’re a recent college graduate. Now it’s time to get out into the world of work. They earn money and receive a regular salary. With making money comes responsibility.

Here are 8 money lessons for the class of 2022.

Live according to your means

Getting your first real paycheck can be exciting. It’s tempting to buy things you might not have been able to afford as a student. It’s okay to spend a little money, but it’s more important to know your financial limits and live within your means.

Set a monthly budget

A good habit to pick up early on is developing a budget. What comes in and what goes out each month? On the income side, your main item will be your paycheck. If you have some kind of side hustle that generates a steady income, you should also consider that.

On the outflow page, take a look at everything you’re spending throughout the month. Items like housing, food, a car payment, student loan payments, and other fixed expenses should be part of your budget. Likewise, things like food, entertainment, gas, and others that may vary a bit should also be included.

Make sure you factor income taxes into your budget by withholding a reasonable amount from each paycheck to ensure you don’t miss out come tax time.

Track your expenses

One of the best ways to ensure you’re living within your means and staying on budget is to track your spending. Having a budget is no use if you don’t stick to it. To determine if you’re on the right track, it’s important to track your spending. That way, if you’ve overspent in one area, you’ll know that you may have to cut back elsewhere that month. This can be done through one of the many budgeting apps available, or through an old-fashioned Excel spreadsheet.

Save it for a rainy day

Things often happen when we are least prepared for them. An emergency fund can help pay for unexpected bills like a major car repair or the need to buy a new laptop if your laptop breaks. Perhaps more importantly, the fund can help you make ends meet in the event of illness or job loss.

A popular rule of thumb is that you should set aside 3 to 6 months of your ongoing monthly baseline expenses. Whether that’s the right amount is up for debate, but starting out it’s a good idea to set aside a portion of each paycheck in a liquid account, like a savings account, to build an emergency fund.

Save for retirement

Retirement may seem a long way off, but one of the biggest advantages you have is the long time until retirement. The ability to earn interest on your pension contributions over a period of 30 or 40 years or more is a major benefit.

If your employer offers one, the easiest way to start investing for retirement is to pay a portion of your salary into the company’s 401(k) or similar retirement plan each pay period. Contribute as much as you can, but at least get started. Even if the amount is minimal, try to increase the percentage of your salary that you pay in each year. If your employer matches your contribution, try to contribute at least enough to get the maximum contribution as this is essentially free money.

If you’re uncomfortable choosing your own investments, many plans offer a managed account option like a target date fund.

In addition to an employer-funded retirement plan like a 401(k), you can contribute to an IRA. A traditional IRA can provide tax benefits on your contributions, but Roth IRAs provide the opportunity for tax-free withdrawals in retirement.


It’s a good idea to invest in a taxable account in excess of what you contribute to your 401(k) or other company pension plan. While 401(k)s and IRAs are great retirement savings tools, the money in these accounts isn’t easily accessible before retirement.

Investing in a taxable account offers diversification in terms of the types of accounts and the tax treatment of those accounts. Investments held in a taxable account can be withdrawn without the penalties associated with a 401(k) or IRA. A taxable account can be an ideal way to save for goals that are several years away, but not as far away as retirement. Examples might be saving for a down payment on a home or buying a new car. Additionally, investing in a taxable account is a great way to build wealth over time.

There are several possibilities for this. Large brokerage firms such as Fidelity and Charles Schwab offer many opportunities to invest in a range of assets such as stocks, mutual funds, and ETFs. With the advent of fractional shares, investing becomes even easier. Many brokers and mutual fund companies, such as T. Rowe Price and Vanguard, offer automated investment options that allow you to start small and grow the amount invested over time.

Hand back

One of the rewards of doing well in life is giving back to others who are not doing so well. Donating to charity is one of the most rewarding things you can do with your money. Every donation, even in small amounts, helps others in need.

Have fun

An important money habit is to put some money aside just to enjoy yourself. That can mean having dinner at your favorite restaurant, seeing a play, or attending a sporting event. Maybe just going out for a beer with friends.

We all work hard, it’s important to take some time and money to do something you enjoy once in a while.

These money lessons provide a solid foundation for your money journey as you graduate and move through the different stages of your life. 8 Money Lessons for the Class of 2022

Brian Lowry

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