The Big Mistake Every College Grad Makes

One of my friends graduated college a year before I did. He got a decent job making a decent amount of money. But if you ever visited him, you would have sworn he was making a six figure income. Possibly with an undilutable stock option at a startup on the verge of a multi-million dollar IPO. (He wasn’t).

The second he got his offer letter, he traded in his modest sedan for a luxury Beemer, and ditched his roommates for a bachelor pad in Brickell, Miami. The monthly payments he could afford. The lifestyle he could not.

$50,000 Millionaires

This phenomena of overcompensating for humble beginnings is one of the most crippling financial decisions fresh college grads make. Instead of focusing on eliminating student loan debt, saving up some cash for a home purchase or business, or paying off your car so you never have a payment again, college grads are signing leases, renting luxury apartments, and perpetuating a cycle of debt.

Post-graduation is one of the best times to focus on getting your financial future solidified. You probably don’t have kids or a family to support, when an appliance breaks you can call a landlord, and you’re in a unique position to decide how much lifestyle (rent, car, bills) you can afford. It’s much easier (and less painful) to start small and grow into the lifestyle you dreamed of, than it is to start living lavishly and realize two years from now you can’t afford to keep this up.

So avoid the temptation of biting off more than you can chew, live humbly for a few years, save your cash, and when you’re ready, then you can begin to upgrade your lifestyle.

Slowly.

 

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