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Attention Parents: Don't Let Your College Graduate Child Learn A Lesson from the School of Hard Knocks

For Immediate Release
June 11, 2001

Media Contact: Will Casserly
wcasserly@ricedelman.com
(703) 251-0110

Fairfax, VA - Young people often fail financially because they don't understand how money works. They get that "first" job and then establish some credit. A purchase here, a new car there, a vacation after that, and, before one knows it, that young person finds him- or herself knee deep in debt. Fortunately, there are some straightforward tips parents can give their kids to avoid this painful lesson.

Says financial planner Ric Edelman, author of the national best-seller, Ordinary People, Extraordinary Wealth (HarperCollins), there are four fundamental money rules every new college grad should follow:

1. Contribute the Maximum to Your Company Retirement Plan
   Too many young workers don't do this. By failing to join the 401(k) for a mere five years, until age 26, today's college graduates could reduce their future savings by as much as $1.4 million. Grads need to know that saving small amounts now is more important than saving a lot of money later.
   
   
2. Stop Spending Money on Things That Fall in Value
   Without question the "good" life is what every young person wants. For a lot of college graduates, it's not uncommon for them to act like they have wealth even though they are not, in fact, wealthy. Fancy new watches, clothes, and friend-impressing new cars all fall in value. Young people need to invest money into assets that will hold their value, and even grow in value, such as real estate, stocks, bonds and mutual funds.
   
   
3. Forget about Buying a Condo
   Condos are attractive to college graduates, thanks to their low prices. But rising association fees and sluggish appreciation rates often make these properties difficult to sell at any price. Recent grads should not buy a condo; instead, they should rent until they have saved enough to buy a townhouse or single-family home, where appreciation potential and resale opportunities are greater.
   
   
4. Forget about Getting Married and Focus Instead on Being Married
   Weddings are expensive. According to Bride's Magazine, the average wedding costs about $19,000. Why spend such huge sums on a four-hour party?
   
   

Learning these simple rules can have a tremendous impact on a graduate's financial future, and by understanding the importance of living below one's means and being financially responsible, young people can look forward to a more enjoyable adult life.

Ric Edelman's book, Ordinary People, Extraordinary Wealth, tells the 8 secrets of how 5,000 ordinary Americans became financially successful, and how you can too.

Source: Edelman Financial Services Inc.