12 Fundamental Money Advice For Fresh Graduates

12 Fundamental Money Advice For Fresh Graduates

Last Updated on May 28, 2022

Graduating from college is a realized dream for every student and their family as it caps off one’s formal education. It is also a stepping stone that hopefully prepares every new adult for the “real world.”

However, as much as colleges and universities try to prepare their student for the challenges to come, an important life lesson is often taken for granted by these educational institutions.

At the top of the list of essential yet often neglected skills every adult should have, is how to handle money. The lack of this crucial adulting skill leads many young adults to fall into debt early in their careers. If you think that it is normal, no, it should not be if you will follow the lessons below.

As a college teacher, I often mention the importance of personal finance, not only on the job but also for my students’ future. So, as the graduation season comes, here are twelve money lessons you should learn.


  1. Give back to God first, pay ourselves second.
  2. Build an emergency fund early.
  3. Get insured.
  4. Create a budget.
  5. Track your expenses.
  6. Start investing as early as possible.
  7. Avoid debt.
  8. Master the art of compound interest.
  9. Be careful with lending.
  10. Avoid being a guarantor or co-maker.
  11. Credit card is not free money.
  12. Live below your means.

1. Give back to God first, pay ourselves second.

God owns everything, but He only asks for a fraction. Though God doesn’t need our money, he expects our stewardship. So tithing is a way to acknowledge that everything we have is from Him.

I learned that as long as we are faithful to God in our finances, He will also be faithful to us. We may not get all we want, but we know that He will deliver our needs.

After our tithes, it is also essential to pay future ourselves by also setting aside a portion of our income.

You may read more about money lessons from the Bible here.

2. Build an emergency fund early.

An emergency fund is a buffer for your expenses so that when something unexpected affects your finances, you can still pay for your needs without getting into debt.

This emergency fund is usually three to six months’ worth of expenses that you save in a separate bank account. Just make sure that you will only use it in times of emergency.

An emergency may include sudden loss of job (similar to what happened during the start of the pandemic), house or car repairs, medical expenses, and more.

You may read more about emergency funds here and here.

3. Get insured.

Life and health insurance are crucial if you want peace of mind financially. Getting them ensures that your family will not be too burdened financially if anything bad happens to you.

Though understandably, fresh graduates earn less than those already tenured, it is crucial to get insurance as soon as you can. You can start from a basic plan and then slowly upgrade depending on your and your family’s needs.

There are two general types of insurance that serve different purposes. Health insurance is for hospitalization, and companies usually offer HMOs. But if you’re a freelancer, it is essential to get even a basic plan.

On the other hand, life insurance is for income replacement in case of critical illnesses, accidents, or death. This is crucial if you are a breadwinner.

Getting insurance is buying something that you hope you’ll never use but will be thankful that you did. Many people neglect the importance of insurance because they think it is just a waste of money until they fall critically ill. Unfortunately, you will no longer be qualified to get one when that happens.

So if you’re still uninsured, talk with your insurance agent friend. Just remember that when talking with them, they must be selling what you need, not what they want to get a higher commission.

You may check this article regarding the proper financial hierarchy.

4. Create a budget.

Budgeting is one of the essential skills for anyone who wants to control their finances. By creating a budget, you are essentially telling where your money will go and never asking where your money went.

Budgeting is harder for fresh graduates because there are so many temptations around, especially in this age of consumerism. But trust me, if you develop the financial discipline to follow your budget, the next decades of your life will be better.

You need two types of budgets. The first is for your short-term needs like groceries and utilities. The other is for long-term goals like projecting for a house or car or marriage.

You may read more about budgeting here.

5. Track your expenses.

Tracking your expenses means you need to know where you spent your money. This habit will simplify your budgeting because you can identify the expenses eating your income.

You may use a traditional pen-and-paper, a cellphone app, or an Excel sheet to record your expenses. Whatever approach you choose, the important thing is that you build the habit.

It won’t be easy at first, but eventually, it will become easier.

6. Start investing as early as possible.

It is common for beginners to dive head-on into various high-risk investments without the appropriate protection of emergency funds and insurance. Then when sudden emergencies happen, they have no choice but to withdraw their investments, even at a loss. 

Please take note that though it is crucial that your money grows through investing early on, it is also critical that you have an emergency fund first. 

Once you have accomplished your desired emergency fund and insurance, you can select from various investments. But first, you need to know your risk appetite, investment time horizon, amount to invest, etc.

You may read more about investing here. If you’re interested in the stock market, you can check this. For Mutual Funds, check this.

7. Avoid debt.

Debt is very tricky because it can help but most probably hurt you if you are not careful. As a personal rule of thumb, I avoid debt as much as possible. This is something I learned from the Bible through the book of Proverbs that the debtor is a slave to the lender.

It may be against what most people are doing, but trust me, a debt-free lifestyle is less stressful. Without debt will also open more options because you are not always thinking about how you will pay your debtors. Maybe there is a reason why debt and death sound alike.

If you need more money for your needs, increase your income by starting a side hustle.

8. Master the art of compound interest.

It is famously attributed to Einstein that compound interest is the eighth wonder of the world. He who understands it earns it; he who doesn’t, pays it.”

Compound interest can either help you or destroy you. If you use it in investing, compound interest will multiply it. However, if you are in debt, compound interest will also multiply it, making it harder to pay.

Compound interest can be a great ally or a terrible enemy.

9. Be careful with lending.

The flip side of the debt coin is also to be careful about lending money. Many relationships were destroyed because of unpaid debts from families, friends, or coworkers.

Remember that money is not the main issue regarding debt and lending, but the relationship, trust, accountability, and integrity that come with it.

So, if you think that the person doesn’t have the capability to pay, it would be better to donate a small portion to them than hold a grudge if they fail to pay.

You may check the post regarding the important considerations before lending money here.

10. Avoid being a guarantor or co-maker.

Another common money mistake comes from being a guarantor or co-maker for someone else’s loan. Being a guarantor is dangerous because if the original debtor fails to pay their debt, you, as the guarantor, will be liable to pay them. Just imagine the stress that it can cause you.

I know at least two sets of friends whose friendship was forever destroyed because of unpaid debt. By being a guarantor, you share the risk without enjoying any benefits.

Personally, I already refused to be a co-maker on two separate occasions. It did hurt the person, so I had to explain my reason.

11. A credit card is not free money.

Many young people get trapped in credit card debts as high as millions of pesos. This is because movies and TV series often portray rich people as only using credit cards when shopping.

Then some banks would even just randomly send you a card or increase your credit limit even if you are not requesting in hopes that you will spend more.

Unfortunately, some thought that their credit card was as good as free money, so they just paid the minimum amount. Little did they know that they were only digging a deeper and deeper debt hole by paying only the minimum amount.

Remember that while credit cards are convenient, they will require discipline to use them properly.

If you want to learn more about credit cards, you may read this.

12. Live below your means.

Finally, the most important lesson is to live below your means which teaches that you should not spend more than what you earn. This way, you will not fall into debt.

For example, if you earn P20,000, don’t spend a peso more. If you need more, you will have to find other ways to supplement your needs or wants.

Living below your means does not simply mean saving a few pesos. It is a way of life. It teaches contentment that hopefully will develop into a more intentional living.

Final Thought:

First, I want to congratulate you for putting in the work to graduate. Your family and friends must be so proud of you. Second, I welcome you to a new chapter of your life.

You will face many challenges in your adulthood, especially in terms of finances. That is why I wrote this post, hoping it can provide you with a starting point.

Just keep the faith that in whatever challenges go before you, God has a grander plan for you.

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