Now that we appear to have entered the afterglow phase of graduation, with the requisite commencement speeches festooned with all the Google-exhumed profundities from a veritable Lyceum of erudite dead people, I’d like to place something of a governor or price of entry, going forward, on those who would speak to any class of newly minted grads:
You can give a commencement address if and only if you have or have paid off student loans.
If nothing else, this should filter out a lot of speakers who never should have delivered commencement addresses in the first place. For another, under my system, you’re likely to get speeches that emphasize empathy over motivation. Because if we’re honest here, nothing is more uplifting than knowing you’re through with college.
Considering that I meet my own qualification of having repaid my student loans, I think I can offer some actual useful advice to the class of 2018, albeit of a personal finance bent. In looking back 35 years since my last college graduation, these are the lessons I wish to impart to you and, if they’re still listening to me in 10-12 years, my own two sons.
Start a Roth IRA. Really, I don’t care how you get the money. Graduation gifts. Sell your car. Sell stuff you don’t use anymore for 10 cents on the dollar. Airbnb behind your parents’ back. Whatever you do, legally get $5,500 or as close as you can get to it and start a Roth before your parents kick you out of the house. Ideally, you would continue to contribute in the years to come. But let’s say you just fund it and forget it. That $5,500 invested at age 21, left alone until you retire at 68 and assuming a 7 percent annual rate of return, would be … more than $132,000. Meet the miracle of compounding and time. Play around with this calculator using various scenarios. Pretty amazing.
Start an emergency fund. It’s the first thing you should do after your parents kick you out of the house, albeit in a loving way. Figure out what three months of living expenses would be for you, then start saving little by little. (Insert part about saving $5 by not buying that latte every morning.) Of course, the only way you know how much it costs for you to live is to draw up a budget. Which leads us to …
Create a budget. You can find help anywhere, like here. Remember when you were 10 or 11, and you told no one in particular that you couldn’t wait until you were older and all grown up and out of the house and how life would be so much better because you could do what you wanted to … and your parents were off in the corner chuckling? This was why.
If your employer (I know, seems like a massive assumption right now) offers a retirement savings plan, sign up. Give what you can. If an employer match is offered, move heaven and earth to save enough to snag all of it. If your employer automatically signs you up, don’t opt out. Don’t. If you set this up so that the money is taken before you can get to it, you will learn to do without it. Trust me. I know of what I speak.
Don’t let student loan debt freak you out too much. (Which isn’t to say the nation as a whole shouldn’t, because it should.) Learn all you can about what you owe, the interest rate, the terms, the ways you can adjust payments to make it more affordable. The faster you learn, the sooner you can avoid reading advice columns with headlines such as “3 Strategies to Help You Say ‘Bye, Felicia’ to Student Loan Debt.” To which I would add, fo shizzle, Ice Cube.
Learn more about Social Security. OK, maybe it’s asking a lot of a college graduate to start thinking about Social Security. So if you don’t want to explore the website, at least don’t embrace the trope about Social Security not being around when you’re ready to retire. It needs fixing. And one would assume that Congress, at some point, would prefer fixing it over being in a room full of angry old people who have been doing strength training for the previous 10 years.
Don’t’ obsess about buying a house. You still can have an American Dream and rent. I remember well in the mid-’90s walking into the new McMansion of a friend and noticing the lack of furniture. The logic was buy as big of a house as you could afford, because the value was only going to rise. Enter 2008.
I’ve been a renter and am now a home owner. Don’t make this an investment decision. Make this a quality-of-life decision.
No “woe, is me.” Yes, this is an uneasy time for college graduates. It was an uneasy time when I graduated in the early 1980s in the middle of a recession of high unemployment and interest rates that at one time were 18 percent. People thought they knew what the future held. Only they didn’t.
Also consider this: When I was your age, a lot of what we said, a lot of what we thought, a lot of our fears, we kept to ourselves. Today, you call those thoughts social media. It seems that no one believes in internal monologue. Everyone shares every opinion. It’s like being able to read everyone’s mind. OK, I’m sounding old now.
Point is, don’t freak.
A final thought for you millennials, from this baby boomer. First of all, I am sorry. I don’t know if we screwed up the world for you. I do know we can be condescending. Also, Google “yuppy” sometime. That was us when we were your age. I will meet you at the next paragraph after you stop laughing.
You want intimidating adult role models? Try ours. Yes, the … (activate echo chamber) “greatest generation.”
That would be my parents. Born in 1920. Came of age during the Great Depression just in time to be separated by war. My mother had to drop out of school to support her parents and in the process lost about a quarter of a century of her working life.
Years later, cogitating about her generation’s greatness, my mother found nothing great about it. They didn’t set out to be great. This was what life threw at them. They dealt with it. Put their heads down. One day at a time. Not necessarily bubbling with optimism but knowing that despair wasn’t an alternative.
So in other words, you folks are pretty much where they were before they became great. Or more precisely, before circumstances forced the opportunity on them. And now an opportunity is yours to do with as you see fit. Your choice. And no one, dead or alive, has uttered words great enough to make the hard choices easy.
And maybe that’s as a good a message to convey in any graduation speech.