Be responsible, go back home after college

According to Monster.com, 60 percent of college graduates move home with mom and dad after graduation and the trend is on the rise. The statistic holds true with my friends from the class of 2006. More than half moved back to the suburbs to start adult life, much the same way they ended high school life — with their parents. A lot of people say generation Y needs to grow up and take some personal responsibility and that we have been coddled by our helicopter parents (see the comments section).

But when you look closely, it is glaringly apparent that moving back in with parents is one of the the most responsible things a new college grad can do. By sucking it up at home for a year or two, young people give themselves the opportunity to take control of their career, take control of their finances and transition from the care-free college fantasy world to the real-world of work, marriage, kids, mortgages and car payments.

Take control of your career

To live comfortably in a big city like New York, students are forced to take a high paying, but less than satisfying job. Often, top graduates end up working for the best paying investment bank or law firm. I'm sure you could find a small minority of conservative students who had dreams of becoming an I-banker since middle school, but for the most part these jobs are going to the top tier students who are trying to make a quick buck before they retire at 30 (or so they say).

By moving home after graduation, you have little or no rent which allows for more freedom when searching for a job. There is no need to sell out to an investment bank if your real goal is to work with underprivileged children. Depending on where your parents are located, you are probably missing out on the big city night life and social scene, but you have lots of opportunities to find the perfect job, regardless of pay. If ditching the social scene for career sake doesn't demonstrate responsibility and independence, I don't know what does.

Take control of your finances

Real wages today are lower than they were for the past two generations of workers. Couple that fact with today's insane housing costs and an increase in contract workers not receiving benefits, just getting by on forty or fifty thousand a year in a major city is nearly impossible. Attempting to save any reasonable amount of money the first few years is a joke.

However, moving home with mom and dad will immediately save you about $700 a month in housing costs. At least there is some extra cash flow. In two years, you can save up enough to move out on your own without worrying about going into credit card debt for basic necessities like fixing your car or buying groceries.

Take an appropriate adjustment period between college and the real world

People really do struggle adjusting from college to the real world. A good friend of mine just fulfilled her life long dream of moving to New York. She still loves the city, but she is overwhelmed and doesn't exactly like her day job. Sure, many people go through this tough transition period, and chances are she will eventually enjoy it, but the transition from child to adult is different, and oftentimes, more difficult for today's youth.

"This period is not a transition, but an actual life stage, according to Jeffrey Arnett, associate professor at University of Missouri and author of Emerging Adulthood: A Theory of Development from the Late Teens through Early Twenties. Arnett describes the period between college and adulthood as, "a self- focused stage where people have the freedom to focus on their own development." Notice he calls this period of stage in development and not just a transition between two stages.

So why do we still try to go from adolescent to adult in a matter of weeks or months?

Moving home for a while enables an appropriate and productive transition. Rather than focus on rent, bills and kids, emerging adults living at home with their parents have the ability to focus on the most important aspects of emerging adult life: figuring out who they are and what career is right for them

Cross-posted at The Brazen Careerist

Getting "Beyond Paycheck to Paycheck"

High school teaches us basic algebra, geometry and calculus. It teaches us how to appropriately research papers and cite sources. We learn U.S. and world history. But, most school systems fail to give us a basic financial education.

In his notorious book, Rich Dad, Poor Dad, Robert Kiyosaki points out this fatal flaw in our school system and proceeds to give us a financial education. Of course, he then released a handful of other books that more or less say the exact same thing, but that's not the point. In the grand scheme of things, being financially literate is one of the most important skills anyone can have.

This is the number one reason I majored in Accounting and Finance. It wasn't because I love crunching numbers and valuing stocks. It was because I knew that learning the basics of money and finance is an invaluable weapon to have in my arsenal. I don't regret this decision for a minute, but I recognize that you don't need to study the topic for four years to learn the basics. All you need to do is read the right books.

Beyond Paycheck to Paycheck, by Michael Rubin, is certainly one of the "right" books. The book is "a conversation about income, wealth and the steps in between." And it's a conversation we all need to have.

So what financial advice does Michael give to young adults seeking to better manage their money? He was kind enough to let me pick his brain on the topic. Below is the Q&A that ensued:

What is the best way for underpaid entry level workers to save some cash?

It seems like every financial expert is all over young people for spending too much on coffee. Look, there is a savings opportunity there for some folks, but most entry level workers aren't going to come up with an extra ten grand a year by pinching pennies at Starbucks. Instead, you've got to put major focus on major expenses, like your choice of housing and car. If you're an underpaid entry-level worker, you can't live in the neighborhood of a fairly paid middle-manager or drive the car your boss drives. Not yet. Once you commit to high housing or car expenses, you pay them for a long time.

What is the biggest financial mistake young people make after college?

Overly aggressive spending on housing or a car—but we just talked about that. Another common financial mistake by new graduates is not signing up for their 401(k) plan, especially if they are fortunate enough to work for a company that provides them with an employer match. Although money is often tight for young people, they will still likely experience the largest increase in pay they'll ever get – from virtually nothing as a senior in college to perhaps $30,000 or so at a new first job. If a new grad making $30,000 can immediately become accustomed to living on $27,000 – still a $27,000 raise – he or she will be saving 10 percent from the get-go. With a 50 percent match, that's $4,500 saved for retirement – and it will grow from there.

Why should I be worried about retirement already?

Actually, no twentysomething should be worried about retirement. You've got all the time in the world. It's only if you haven't done anything about your retirement and are now a fortysomething that you should be worried. The key for twentysomethings is to just get started. By starting to save for retirement while you are still in your twenties, you remove one of the key sources of potential worry later-on: procrastination during your youth. Thanks to the miracle of compounding interest, the amount you have to save when you are young is quite minimal compared to what you'd have to save if you wait just a few years.

Author's Note: You can get a free basic motivational summary showing you your personalized numbers by clicking here.

What do you mean when you say, "connect with your money emotionally?"

That's first on the list of the Top Ten Saving Strategies. When you are emotionally separated from your money—from your cash—you spend more. It's just human nature. When I speak to audiences, hardly anyone raises their hands when I ask "How many of you are paid in cash?" In fact, few people even get a real paycheck anymore—it's all direct deposit. Our spending is the same way: no cash, almost all credit cards. Most people have no idea how much cash they have in their wallets until they find themselves at a place that has the audacity to not accept credit cards.

Why does that matter?

Because when you're not connected to your money emotionally, you spend more. Spending cash hurts—right away. Credit cards are painless—until you get the bill.

Is the solution to get rid of your credit cards?

Absolutely not. There are plenty of positives about credit cards—but that's another discussion for another day. For now, simply recognize that an emotional separation from your money means you will spend more. (Doubt me? Think about casinos.) So try this: next time you go to the mall, leave the credit cards at home. Take some cash with you and see how your spending habits change. You'll find that when there are two options for something you need, one at $59 which is "good enough" and another at $79 that is "better," being forced to spend cash means you'll likely take the one for $59.

You say constant budgeting isn't required, what do you recommend instead?

The beauty of following the first nine of the Top Ten Saving Strategies is that you'll be saving so much that you don't need to micromanage your finances. Budgeting can limit your desire for spontaneity, making it hard to keep at it. But you can get away without budgeting at all if you simply commit to saving. After all, if you're saving 15 percent of your income, what's the difference how you spend the other 85 percent?

What should you do with the money in your 401(k) account when changing jobs? What if you are leaving to pursue your own business?

The big advantage of rolling your 401(k) account into a regular IRA upon changing jobs or going into your own business is that you don't wind up with 401(k) accounts all over the place after you—like most of us—job hop a few times. Simple is better because simple gets done. Roll each 401(k) account into an IRA and you'll never have more than one 401(k) plan to keep track of. Plus, you'll benefit from the virtually unlimited investment choices available to you in your IRA.

It's "aSmallWorld" when you're rich & famous

If you never thought your connections on Facebook and MySpace would matter in the real world you were right. You have to be a member of an elite online social network to get that sort of recognition.

Let me most properly introduce you to aSmallWorld.com (aSW), the leader in a new wave of socially elite web networks that only accept "the best of the best."

"We allow our members to connect, reconnect and interact more effectively with like-minded individuals who share the same circle of friends, interests, and schedules," boasts aSW's homepage. "We have imposed certain criteria in order to keep the network exclusive."

A little ambiguous? The classifieds on aSW should make things perfectly clear:

"The site already features ads where people sell classic Jaguars, yachts, and Cartier watches," notes Catherine Holhan of BusinessWeek. "Advertisers include champagne producer Moët & Chandon and private-jet company Sentient."

Sounds like the online network at aSW is nothing but a "country club" for Web 2.0.

Critics have already coined a winning nickname – "snobster." But aSW chairman and found Erik Wachtmeister retorts. "One's network site is less useful if it is diluted by people you don't know." Spoken like a true elitist.

The last time I checked, the true value of online networking was the magnitude of diversity. People with little access to the right people could get connected and share in a way that might not otherwise be possible. But I guess that doesn't matter if you already know the right people.

When you break it down, I suppose networks like aSW won't be stealing any more great jobs than the CEO who saves the prime positions for his golf buddy's sons and daughters. But there's something so arrogant about the site that I just can't ignore.

Do affluent Americans really need an online social network to set them apart from the masses? If nothing else, aSW is a tribute to upper-echelon exclusion. It's disheartening in an age where the best way to prosper is to come together.

There will always be someone trying to taint an otherwise good thing. Fortunately, you can't ignore the good we've seen through internet communities thus far. I'll keep an optimistic outlook. Let's just hope enough people look past the conceited aSW network and do the same.

Suits all week for a day in my boxers

As I stood, squished like a pig in a pen, on the train to work this morning, beads of sweat dripping off of my 6 foot 4 inch frame onto the poor tiny woman standing below me, I thought to myself, "What's up with sacrificing comfort, and more than likely, body odor, for a nice suit?"

Yes, I'm aware that I am something of an anomaly; most people these days are not required to wear full suits, especially in the summer. But specifics of my job require playing dress up. If it wasn't next to impossible to find a nice, decent priced suit for someone my size, I really wouldn't mind.

I have four suits, and there are four suit days a week. Friday is work in my boxers day. You would think that four suits and four days make a pretty good match. What you don't know, is that suit number four is quite possibly the ugliest piece of clothing you have ever seen. It's an ugly tan color and made of a heavy twill type material. The pants are a little too short, and my oversized brown shoes stick out like a clown's. Suit number four stays in the closet.

At first glance, suit number three appears to be perfectly fine. It's a plain black suit with a three button jacket. According to fashion experts, like my mother, tall people are supposed to wear three button jackets. I used to think this was a way for sales people to sell me the first suit I tried on, but if you ever check out a NBA basketball player's suit, they always have a minimum of three buttons. For future reference, this is the first, and hopefully last, fashion tip I will ever give on this blog. Trust me, you don't want any more.

Anyway, back to suit number three. For some reason it just doesn't fit right. The folks over at The Men's Warehouse think that because I am tall, I need an extra huge jacket. Despite what the Big & Tall stores lead you to believe; tall does not equal fat. The jacket hangs down well below the standard, well fitting length and the pants were hemmed for someone thee inches shorter than me. Suit number three comes out once a week, but I'm never happy about it.

Sophomore year of college I purchased a suit for my grandfather's funeral. Today, I call it suit number two. And it actually fits quite well. The jacket is normal length and the pants rest nicely on top of my shoes. Here is the problem; it's green! I don't know what could have possibly been going through my head when buying it, but I'm pretty sure all of those frat parties were affecting my better judgment. My green suit, aka suit number two comes out once a week barring any unforeseen circumstances.

Last summer I finally took my credit card somewhere other than Men's Warehouse. I figured it was time to buy a real professional suit. What do you know; I found a great blue pinstriped Italian suit, on sale. Today, I call it suit number one, my go-to suit. The jacket fits great, the pants are perfectly tailored, and I feel like a stud in this thing. If it was socially acceptable I would wear my go-to four days a week, I swear! But, as we all know, it's not. Regardless, I do whatever I must to wear the blue pinstripes twice a week. And it might be my imagination, but I swear people treat me with a little more respect when I wear it.

Before You Apply to Grad School, Stop and Think

One of my favorite topics is the value and purpose of going to graduate school, especially in your twenties. I just heard another story about a twenty-something with a newly minted MBA who's having a devil of a time finding a job. When employers see MBA on her resume, they assume that she should be looking for a management position. Unfortunately, because this grad's previous positions were primarily administrative and customer-service oriented, many employers don't think she has the practical experience to qualify for such a position.

I've gotten dozens of e-mails from graduate school alumni in similar situations. After spending tens of thousands of dollars on an advanced degree, they find that they are no more marketable in their chosen field than they were before they started school. The only difference now is that their job search is more urgent because they are deeply in debt.

To me, this phenomenon speaks to the danger of going back to school without a great deal of forethought. So many people choose a graduate program because they aren't sure where they want to go with their careers, when in reality, they should first be doing a cost/benefit analysis to determine what such a program is going to bring them in terms of increased job prospects and financial compensation. Of course, before investing an enormous amount of money, time and effort securing an advanced degree, they should also do enough research and have enough hands-on experience to know that they actually like the field. I've heard lots of stories of twenty and thirty-somethings who graduate with a Ph.D., JD, or MBA only to end up deciding they want to do something else entirely. Lawyers become advertising directors, doctors become life coaches, marketing executives become journalists, and so on.

Bottom line: Although returning to the safety of books and finals might feel more comfortable than the workplace grind, graduate school is not something you should do just for the heck of it. Rather, you should first determine in concrete terms why you need the advanced degree to move ahead in your career of choice, and then map out a plan for how you'll use the training and degree to facilitate the level of success you desire.

Sometimes people ask me why I haven't gotten an MBA myself, and the reason is this: I work for myself, and as such don't have a company subsidizing the $50K tuition. If I'm going to pay that kind of money out of my own pocket, then I better be sure I'm going to make it back with my post-MBA income. I know for a fact, though, that right now this won't happen. I'm at a point in my career as an author, and my career as a marketing and career consultant (both of which I love), where getting that MBA won't make much of a difference at all. I would like to get an advanced degree someday soon, but I don't kid myself. It's because I like to learn, not because I think it's a magic ticket into an uncharted area of the career stratosphere.