How to Build Wealth After Graduation

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You’ve just graduated college and you’d like to be wealthy someday. Problem is, you have no clue how to make it happen. First, you’re broke and may be drowning in student loans. Second, no matter what the experts might say, it feels like there are tons of fellow grads fighting over a handful of jobs. Third, though you don’t mind hard work, you don’t want wealth to come at the expense of a social life, a family and the chance to do some good in the world. Should you give up the dream and content yourself with an average life?

Not at all. It’s completely possible to become a multimillionaire before you retire. Right now you have an advantage you never will again: youth.

Many young people have no concept of how simple it is to build wealth. Not easy, because hard work and self-discipline are required, but simple. Any intelligent person with an ordinary career trajectory can do it. But now is the time to get started. With every year that passes, your window of opportunity closes a little more. Sounds good, right?

Understanding the Astonishing Power of Compound Interest

If you take a penny and double it every day for a month, how much would you end up with? A hundred dollars? A thousand dollars? How about a million dollars? Not even close. Starting with a single penny, if you double it every day for 31 days, you end up with $21,474,836.48. That’s compound interest. That’s how you get rich. And that’s why, when it comes to wealth building, your age gives you a major advantage.

Starting with your first job out of college, you can try investing 15% off the top. By the time you retire, you’ll be a multimillionaire. Yes, you’ve heard the “pay yourself first” principle before. But you probably don’t realize just how wealthy it can make you. Let’s say you start making an average graduate’s starting income (which, according to The National Association of Colleges and Employers, is $52,569 a year, as of 2016). Assuming you are good at your job and get consistent annual raises of 4%, you’d be making $77,815 a year 10 years from now, and $252,385 in 40 years. Not only will you be making more money, but you will also be able to save more money. If you consistently (and that means every year) deposit 15% of your income into investments, compound interest will begin to accumulate like you wouldn’t believe. Assuming a return of 10% a year, you’d be worth more than $5.4 million when you are ready to retire. (Assuming, of course, that you put this money aside and aren’t spending it on things you shouldn’t be.)

Where Should My Money Go?

First, pay the government because things can get troubling if you don’t. Second, pay yourself. Put the aforementioned 15% of your income in some sort of investment. Third, pay the interest on your debts, such as credit cards, student loans, car loan, etc. Keeping debt low is critical. (Your credit utilization level — the amount of debt you carry in relation to your overall credit — is a major influence on your credit scores. You can find out where yours stand by viewing two of your scores for free on Credit.com.) Fourth, pay for non-critical parts of your life like entertainment, travel and toys.

Don’t succumb to the temptation to pay for prestige. A big part of being able to save the requisite 15% involves not blowing your paycheck on expensive cars, high-dollar meals and trendy couture. But that needn’t mean depriving yourself. Beautiful, comfortable clothes are not cheap, but they don’t have to cost a fortune. You can buy a great pair of slacks for $150 or you can spend 10 times that amount. The difference will be the label on the waistband. The point is this: The best material things in life are affordable. They are not cheap (quality never is), but if you buy them selectively and use them with care, you can enjoy a life as materially rich as Mark Zuckerberg on an income that wouldn’t get him through lunch.

Landing That First Job

Of course, this advice hinges on your finding a decent-paying first job. (To start, you can read these 50 things recent grads can do to score their first job.) Depending on where you’re applying and your prospective industry, you may also want to consider the following ideas during the application process.

  • Forget the standard resume-cover letter program. Instead, write a direct marketing letter that lets your prospective employer know you understand what their problems are and that you have the solutions.
  • Call the office of your prospective future boss and ask for a short, informational interview. This is a great way to get in that locked door and find out a lot of personal and professional information about your prospect.
  • If you feel you might not get the job you are seeking, suggest that you can do a project for the company on a freelance basis, perhaps for free.

Right now, you may think becoming a millionaire is not a laudable goal. You might say money doesn’t matter. Well, it may not matter now, but it will when your kids are applying to colleges or when you’re approaching retirement. Financial independence frees you to live a rich, fulfilling, authentic life. And that’s the true definition of wealth.

This article originally appeared on The Dollar Stretcher.

Image: gradyreese

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The Best (& Worst) Cities for New Graduates Seeking Work

Graduation is coming up soon. We narrow down the best and worst places to find jobs for graduates.

Graduation season is around the corner, which means it’s time to put that degree to work.

Many graduates have little to tie them to any particular place, so they can choose to start their careers where jobs are available. But which cities have the most jobs?

Data provided by Monster, the employment website, show the best and worst cities for job seekers, based on the number of openings. Monster used the CEB TalentNeuron tool to analyze all entry-level job ads posted online from January 1 to March 22, 2017 that require a bachelor’s, master’s or doctorate degree.

Where to Look for Work

Monster also released data on the occupations with the most openings (physical therapist was tops), and that offered the highest entry-level pay (software developers). Those first paychecks are increasingly important for new graduates, who face a growing mountain of student loan debt. (Wondering how student loan debt is affecting your credit? Check out a free snapshot of your credit report on Credit.com.)

Check out the 10 best cities for new graduates to find work and the five worst. Locations on the list are all in metropolitan statistical areas with populations of at least 200,000 or counties with populations of at least 15,000.

10th Best: Philadelphia

8,304 job postings

9th Best: Houston

10,021 job postings

8th Best: Seattle

10,512 job postings

7th Best: Atlanta

10,937 job postings

6th Best: Washington, D.C.

11,132 job postings

5th Best: San Francisco

11,244 job postings

4th Best: Boston

11,498 job postings

3rd Best: Los Angeles

11,933 job postings

2nd Best: Chicago

15,503 job postings

Best: New York

31,682 job postings

10th Worst: Prescott, Arizona

178 job postings

9th Worst: Lynchburg, Virginia

169 job postings

8th Worst: Yakima, Washington

161 job postings

7th Worst: Chico, California

156 job postings

6th Worst: Tyler, Texas

140 job postings

5th Worst: Merced, California

134 job postings

4th Worst: Longview, Texas

128 job postings

3rd Worst: Bellingham, Washington

122 job postings

2nd Worst: Bayou Cane, Louisiana

121 job postings

Worst: Laredo, Texas

114 job postings

Image: digitalskillet 

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