What advice do you have for new grads?
About this video
Sal advises new graduates to be thoughtful about how they live once they start earning. A fancy car or apartment is exciting at first, but the thrill wears off while the loan payments continue, and it can become a burden. Spending less leaves money for experiences, less stress, retirement and the freedom to do what you want.
You'll be able to
- explain why a big purchase on a loan can turn from a joy into a burden.
- describe what money saved by living modestly could be used for.
- explain why saving early in a career gives you more freedom.
Key words
- Income
- Money you receive regularly, for example from a job.
- Loan
- Money you borrow and must pay back over time, usually with interest.
- Nest egg
- Money saved up for the future or for emergencies.
- Retirement
- The time later in life when you stop working and live on money you saved.
Transcript
- Be thoughtful about how you live. Whatever your income, it's very tempting, you've worked so hard for all of these years, to say, oh, now I have a income, I'm getting real money. Let me go buy a fancy car, or let me go get a really fancy apartment. Sure, treat yourself a little bit, but really think about those implications, because that fancy car, yeah, maybe those first few weeks, you're gonna get really excited about it when it's all squeaky clean and new and your friends are all wanting to get a drive with you, but after a few months, it's kind of gonna wear off, and you're gonna still be paying the loan on that fancy car.
At that point, you might actually view it more as a burden than something that's actually giving you joy. You're just like, oh, why didn't I just buy a cheaper car, then I would have paid it off by now, and then I would have all this money that I could either use it for other things, have good experiences, go on vacations, I wouldn't be as stressed, or, I could be saving that money for my retirement or having a nest egg or having an option that if at some future point, retirement is one thing, and you should definitely be saving for that, but especially when you're, early in your career, you should be saving so that you have freedom to do what you want.
Video © Khan Academy, used under CC BY-NC-SA. Watch on Khan Academy. Puzzicle is not affiliated with Khan Academy.