18 Financial Tips for a 22-Year-Old College Grad

by Jeff Prouty

18 Financial Tips for a 22-Year-Old College Grad:

1. Live below your means.

If you make $40K a year, live on $34K (including taxes) and save the rest. If you’re making $4M a year, live on $3.4M (including taxes) and save the rest.

2. Do you really want / need that $5 per day latte from Starbucks?

That $5 per day, well invested, will be worth $1,000,000+ by the time you are 65 years old.

3. Save your nickels to invest your dollars.

Save on small things, which add up over time, to give you the cash to do something special. A concert, a vacation, a destination wedding.

4. Build your first $100K of savings in a mutual fund, then start investing in individual stocks.

For mutual funds, I like NOBL, a collection of the 61 stocks that have paid increasing dividends for 25 years straight.

5. Max out your ROTH 401K or ROTH IRA options.

You must do this if your employer has a “match”, that’s “free money”.

6. Build a good long-term relationship with a banker.

I prefer smaller, community banks, as I experienced big turnover among the bankers at U.S. Bank in my first five years of business.

7. Buy high-quality stuff that will last a lifetime.

My Hartman luggage is 42 years old, and still works like a charm.

8. Ask “how can I help?”

If you take this approach with your friends, your family, your teammates, your bosses, you will do well in life.

9. When you start investing in stocks, pick stocks that you intend to own for 10 or more years.

“If you don’t intend to own it for 10 years, you shouldn’t own it for 10 minutes” says Warren Buffett.

10. Invest in 30-50 companies that you believe in.

Warren has 46 stocks. Where do you want to place your 30-50 long-term bets?

11. Invest in the horse (the industry) or the jockey (the CEO).

I tend to focus on great CEOs and Founders.

12. What are your 10 highest conviction bets?

Put 40% – 50% of your entire portfolio in those 10 companies.

13. Read “One Up on Wall Street” by Peter Lynch.

My favorite book on saving, investing, Wall Street. And, watch Jim Cramer on “Mad Money”, CNBC.

14. Experiences, not things.

The experiences (the concerts, the travel, the books, the movies, the workouts, the picnics, etc.) will give you so much more enjoyment than the things (the cars, the house, the 85-inch TV, the jewelry, etc.) over the long haul.

15. Subscribe to Barron’s.

If you spend 1 hour each week (Monday) reading Barron’s, you’ll be a better businessperson, a better investor, a better saver, a better person.

16. Live below your means.

I repeat, regardless of your annual income, save 15% or more, every year. Simplify life.

17. Remember Matt Veldman’s (Merrill Lynch) wisdom:

“Live now like others won’t, so you can live later like others can’t.”

18. Consult with a financial professional.

These are simply my opinions and are based on the first 64 years of my life.



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