By Kelly Hodges
Once again college graduation season is upon us. No matter which university attended, degree earned, or honor achieved, most college graduates have gained little financial intelligence along the way. In fact, the average college grad is facing an enormous financial and economic challenge: an average of $25,250 in student loan debt, $3173 in credit card debt, and no guarantee of a job post-graduation.
Yes, many of these young adults find themselves in a tough financial situation and are in need of some sound advice. So for those of you who have a loved one graduating this spring, please consider a gift around the theme of financial literacy. Books and reading material make for affordable, yet thoughtful, gifts and will help set them on the right path for their financial future.
With this in mind, here are a few books that I recommend giving (but anything that will get the graduate thinking about his personal finances and money management strategies will make an excellent gift):
1. The Wall Street Journal’s Guide To Starting Your Financial Life is an easy read which covers the basic concepts that anyone entering the “real world” should understand. Issues of insurance, taxes, retirement savings, and budgeting are all addressed and get the reader thinking about some of these topics. Personal Finance for Dummies is another fundamental primer that covers the materials in a way easily understood by novices. A general personal finance book (these or one of the many others available) is a must have for every graduate’s library.
2. The Millionaire Next Door by Thomas Stanley is my personal favorite to give to college grads. This classic is great because it clearly delineates the difference between achieving true wealth and just appearing wealthy. The person driving the BMW, wearing designer suits, and eating at five star restaurants may in reality have a very low net worth and be in debt up to his eyeballs. Illusions of wealth are often just that- illusions. This book does a great job in driving home this and other important financial lessons that will prove very valuable to the graduate.
3. Dave Ramsey is well known as the anti-debt guru, and his book The Total Money Makeover is unfortunately what some graduates need already at the age of 21. Students often assume that debt is just a “normal” part of life, and it doesn’t take long for them to add car loan, home loan, and all other types of consumer debt onto the college loans already accumulated. This book can help graduates understand the burdens of debt, and change their mindset before they get in too deep.
If you want to step your gift giving up a notch, consider providing your graduate a few sessions with a fee-based financial planner. A financial planner can help a novice structure a budget, set up retirement accounts, figure out insurance, and make sure all the basics are in order. Remember that financial planners aren’t just for the uber rich who are sorting out the latest investment and tax sheltering strategies. Often the financial plan is even more important for those who don’t have much money to spare.
If hiring a financial planner isn’t in the cards, then take some time to teach your grad a financial nugget that’s helped you along the way. Maybe you explain the concept of compound interest and instruct them on how to set up a Roth IRA. Maybe you take out a pencil and paper and go over the basics of structuring a budget. Maybe you offer a few cooking classes and review the money saved by cooking at home instead of hitting the restaurants every night. Just think of something you wish you had known when you were in their position and pass it along. Don’t you wish someone would have done the same for you?
Please add to the discussion and share your book recommendations in the comments below. Have a great weekend!
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Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of her employer or any other person or entity.
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