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What I Wish I’d Known at 18: Money Advice For a Graduating Senior

money lessons graduate

Today’s post is a guest post from radiologist Dr. Matthew Morgan of The First Habit. I typically reserve guest posts for Thursdays, but given the timeliness of today’s topic, it didn’t make sense to put this one at the end of the queue.

I’ve met Dr. Morgan a couple times now — he happens to live next door to Dr. Jim Dahle of The White Coat Investor, and I’m happy to hear the first of his six children is graduating and leaving the roost. I certainly hope he reads this one and that his father bookmarks it for the next five!

Let’s hear what the good doctor wants his son and graduating seniors everywhere to know.


I’m just about to hit a big milestone: my oldest is about to graduate from high school and head out into the big bad world. Yes, please indulge me if I join the chorus of all the generations before me in saying, “Where did all the time go?”

Seems like just yesterday he was 6 lbs. 6 oz when we brought him home. Now he is 6 feet 6 inches and weighs 190 lbs. While there will be few benefits of seeing him off (like a substantial drop in the food bill, and I won’t have to wonder where all my clothes went), I am sentimental about having him leave home. And, like all good parents, I also wonder if I’ve taught him all the right things to maximize his success.

18 years goes by quick!

So in honor of sending (kicking) him out of the nest, here are 7 Basic Habits of Prosperity I want him to understand and begin to apply in his life.

1. Study Money


Make financial education a regular part of your routine. Money-savvy does two things for you: (1) it sets you up for financial prosperity (good offense), and (2) it protects you from wasting money (good defense).

However, getting good at money is not the norm. In fact, most people suck at money. Need proof? Sixty-two percent of Americans have less than $1,000 in savings. Don’t be one of them.

A few key principles will take you a long way if you can stick to them.

  1. Keep expenses lower than income and invest the difference
  2. Pay off credit card balances every month (if you can’t do this, then cut them up)
  3. Maintain an emergency fund of at least $1,000
  4. Save at least 15-20 percent (Pro tip: savings rate is much more important than investment rate of return)
  5. Max out your tax-advantaged accounts: 401(k), 457(b), Roth IRA, HSA, 529
  6. Use low-cost index funds from Vanguard like VTSMX and VTI
  7. Automate your savings and investing (i.e. set and forget)

No one starts out knowing how to do all of this and they don’t teach it in school. Don’t be intimidated by all the strange account names. You’ll get to know them in time. Take matters into your own hands and begin a personal finance curriculum. Pick up a book and start reading some basic finance. Don’t worry too much that you’re doing it wrong. It’s about learning as you go. Here are a couple of resources to get you started.

money lessons graduate
18 years go by quick!

Best Introductory Personal Finance Book

Best Introductory Investing Book

  • Bogleheads Guide to Investing – Written by investors who follow the philosophy of Vanguard founder Jack Bogle, which is the idea that successful investing is not a complicated process, and can be accomplished by anyone with a small amount of effort.

Best Introductory Financial Web Site

  • – A wiki and forum built by volunteers who are dedicated to helping people begin or improve their investing by applying sound investing principles.

Best Introductory Financial Podcast

  • YNAB Podcast – A free podcast by the founder of You Need a Budget (YNAB), which is the leading budget tracking software. Start at the beginning with these little nuggets of financial wisdom. Listen to them while you walk to classes.

2. Be a Skeptic


A large part of building wealth is learning to hold on to your money. There are millions of people trying to help you part with it at every turn. Learn to be a skeptic. Don’t be too trusting. If it sounds too to be true, it is.

If someone wants to charge you a bunch of money to teach you a secret approach to becoming rich, it’s a scam. Never trust unsolicited phone calls or e-mails or Facebook ads. Scammers know how to exploit your weaknesses. They are the predators and you are the prey.

Be careful what you sign up for. Don’t be naive. In most cases, you are not the customer you are the product. Your information is being sold to the highest bidder.

Sophisticated people and tools are “playing” you for all you’re worth.  As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”

3. Avoid Debt


I’ve talked about how debt is like being in a hole. It’s like indentured servitude. It takes away your choices and limits your freedom. The goal of marketers today is to make transactions seamless and frictionless.

While things like Amazon 1-Click and ApplePay may be convenient, they are a slippery slope. It’s easy to lose track of how much you’re spending. Pretty soon, you’re one of the masses of people who are living paycheck to paycheck and barely making minimum payments on credit cards.

Don’t be like them. In fact, use cash if have to. Research shows that people who use cash spend less. It’s likely because letting go of a stack of Benjamins is a lot harder than a quick swipe.

A good rule of thumb is never to borrow money for anything that doesn’t pay you back. A few examples: MD degree = yes. House = maybe. Car = no. Vacation to Europe = no. See how it works?

Another pitfall is education expense. Education is abundant. Don’t overpay. Do whatever you can to cash flow your undergraduate degree. By choosing the right school, getting scholarships, and working (part-time while in school and full time in the summers) can get you through college debt-free.

Unless you have parents footing your bill (hint: as one of six, you don’t), you MUST consider the return on investment. The majority of jobs want you to have a degree. Get your degree without mortgaging your future. Just because you see a lot of kids going into loads of debt, it doesn’t make it smart or right. In fact, if you see the masses doing something, it’s probably a good idea to go the other direction.


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4. Know the Difference Between Gambling and Investing


For the average personal investor, picking individual stocks is no different than horse racing. You’re looking at a “track record” and then you are just trying to “pick a winner.” In order to beat the market average, you must have superior knowledge.

I can’t “beat the street” and neither can you. And you know what? Most “experts” can’t beat the street either. Almost 90 percent of actively managed mutual funds trail passive index funds over a period of 10 years. Read that last sentence again and commit it to memory.

So, unless you have the time and smarts to think you can outperform the experts, do what Warren Buffet and Jack Bogle (two of the top titans of investing) advise: invest in low-cost index funds and forget about it.

5. Be Wary of Predictions


No one knows the future. One of the smartest financial people I know (you know him too — he lives next door) is quick to admit that his “crystal ball is cloudy.” The smartest people are often surprised by what the market does. If you don’t believe me, save articles that predict the market in one to two years and then read them again a year later. Better yet, write down your own predictions.

There are so many factors that affect the market, it’s too hard to know what is going to play out. There are wars and rumors of wars (literal wars and trade wars). There are changes in domestic political power with new policies. There are new technologies. There is inflation. There is irrational exuberance. There is also panic.

Speaking of panic, fear sells. Watch out for doomsday rhetoric. It plays on your fear and regret. Most of us actually fear losing money more than we get joy out of making money. The effect of this is that you can get paralyzed. There are people who get so concerned about market dips that they pull out of the market and miss all the rises.

Remember, slow and steady wins the race. Or, as I say, with market returns, getting the average is actually above average.


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6. Be Your Own Advisor


The investment advisory business is largely one large complicated conflict of interest. The financial industry feeds off the perceived complexity. It makes you think you are getting something valuable for the high fees they are charging you. In most cases, you’re not.

Many financial planners are just commissioned salesmen masquerading as “advisors.” The best way to sniff this out is to consider how people make their money (i.e. follow the money).

If your “advisor” works for an insurance company or an investment firm, then it is highly questionable if the advice is actually better for you or for them. If you do pay for advice, use fee-only advisors who are only paid to act in your best interest (it’s called a fiduciary duty).

One of my favorite mentors told me, “No one looks out for Harry like Harry.” In other words, you are the best person to look out for yourself (except perhaps your dear old dad).

Becoming a smart money manager is one of the most profitable “side-hustles” you can have. Sure, it’s a bit intimidating at first. It all seems complicated. The good news is that you can do it “just-in-time.”

You don’t need to become a financial guru in all things–only the things that are important to you now. Your knowledge will grow with your needs. The resources are abundant and nearly all free (using the web and the local library). And the good news is that a good strategy scales with your income. You can take the same approach to investing $10K as $1M (I know this from first-hand experience).

7. Stay the Course


As you probably know by now, success is not so much about knowing “secrets.” Instead, it’s about common sense uncommonly applied. The most valuable wisdom is nearly always hiding in plain sight.

Yet, though the plan may be simple, it’s almost never easy. In fact, it can be ridiculously hard to follow through on simple plans (just look at all the people who are overweight and in debt). Or in the words of Derek Sivers, “if information were the answer, we’d all be billionaires with perfect abs.” Personal finance, like many aspects of life, is mostly about actually doing what you already know.


“If information were the answer, we’d all be billionaires with perfect abs.” – Derek Sivers


Because you will find that your money saving motivation ebbs and flows and your temptation to spend is abundant (hint: fast food is killing your budget), you should automate your finances as much as possible.

Set up your account to pay bills automatically to avoid late penalties. Create automatic savings/investment deductions from your paycheck so that you don’t have to remember to do it. Let the power of a strong savings rate (at least 15-20%) and the ‘magic’ of compounding interest do its work. If you do this, you will be one of the minority who understand and benefit from the law of the harvest.

Finally, don’t panic. Stick with your plan through the ups and especially the downs. Avoid the financial news–it will make you think you need to DO something. You don’t. If you need reassurance to stay the course, post your concerns on a reputable message board like the Bogleheads forum. Listen to their collective wisdom. As a last resort, you could even give me a call.

As you leave “the nest,” keep these habits in mind. Your future is bright. Set goals and make a plan. As the wise Yogi Berra said, “You’ve got to be careful if you don’t know where you’re going because you might not get there.” Work to live, don’t live to work. Set your sails for financial independence.

Bon voyage, buddy! (And don’t forget to drop us a line once in awhile.)



[PoF: Thank you for sharing your wisdom with your son and with sons and daughters everywhere about to embark on the next chapters of their lives. Congratulations to all of you, parents and graduates alike!

For more wisdom from Dr. Morgan, be sure to check him out at The First Habit.]

What additional advice would you give a graduating senior? Or what advice have you given (and did the recipient of your sage advice listen)?

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29 thoughts on “What I Wish I’d Known at 18: Money Advice For a Graduating Senior”

  1. Pingback: The July Monthly Checkout: 2018 - The Physician Philosopher
  2. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  3. For the average personal investor, picking individual stocks is no different than horse racing.

    This is one I wish I had known when I started too. When that’s all they talk about on the news, it’s easy to see why people would think that’s how you invest.

  4. This comment regarding helping your son with education costs (from a self-proclaimed millionaire) : “(hint: as one of six, you don’t)” makes the post sound more like selfishness than wisdom.

  5. Wow…Six kids! I have four and I’m exhausted. Hearing that you have six just makes me feel a little lazy.

    Great post, teaching your kids about money is one of the greatest gifts you can give them (and yourself as well). My parents were very frugal, but never really discussed money or how to manage it properly. My wife and I have had to learn the hard way. I hope to do a better job with my own children. Even though my oldest daughter is only 8 I’ve already started trying to introduce her to some of these same principles. I figure I’ve got to get it in now before she hits age 12 and stops listening to me altogether.

  6. Awesome post! I think the most important think for today’s generation is avoiding large sums of college debt. That can take years and years to dig out of before investing can even begin at a high level. Great beginner’s guide.

  7. And the greatest of these is to avoid debt! You mentioned return on investment for education and I think this is a great point. Unfortunately, when I was in school, I didn’t enjoy the subjects that would potentially make me money. I think it would be great advise to say if you don’t see the potential in the degree you’re trying for, step back and try something else.

    • Agree. Not all education is about ROI, but if you’re going into debt, there better be a fairly concrete plan about the payback. Follow your passion and cross your fingers is a risky strategy.

  8. Great advice for all ages.

    The title reminded me of my 18th birthday when my brother (8 years older) called me to wish me happy birthday. He said “your present open a Roth IRA” to which I replied “Come on I can buy porn and cigarettes today and you are talking retirement” … obviously in hindsight that was the best birthday present ever.

  9. HI Dr. Morgan:

    I plan on printing out your list and placing on the community bulletin board at my local university where I workout and play tennis ( ULM of Monroe).

    I’m tired of seeing students that are working in the Activity Center WASTE so much of their time listening to music or mindlessly You Tubing INSTEAD of listening (or reading) some type of financial/investing book.

  10. I’d love to see a post of a kid 5 to 10 years out of school and well on his way to FI say that it was my parents who drilled into me the importance of being smart with money.

    So many examples of young people who find this path and their motivation was watching their parents and realizing what not to do.

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  12. Great post. It really is timeless advice, these points apply to any age and any level investor.

    Also, I think it is terrible that basic financial education is not a mandatory course in today’s school system.

    • I think schools are starting to add bits and pieces. My daughter is taking an independent study personal finance course provided by her high school. Maybe I should do a review on the curriculum and her experience.

  13. Great list. I’m forwarding this to my kids.

    Dr. Cory S. Fawcett
    Prescription for Financial Success

    • Thanks, Cory. That’s high praise coming from a man who knows his stuff.

      I know that my kids assume everything I say is suspect. Sometimes advice from an outsider can hit the mark.

  14. Nice list.
    Be wary of predictions is a good one. It is amazing how many predictions are stated in the news headlines each day. Most of them are wrong but nobody seems to mention that later when it doesn’t come true. Nor does it stop us from trying to make more predictions.
    I’m a big fan of your blog, Dr. Morgan

    • Thanks Wealthy Doc, I always appreciate your thoughtful comments. Wouldn’t it be interesting if someone kept stats on financial soothsayers like we do with sports? It could be like a baseball card with a batting average. Maybe that would tone down the heavy swings for the fence?

  15. Solid advice, great post. If you take “Study money” , which should be taught in college or perhaps even high school, and “Be your own advisor”, those two things would probably make the others fall in line simply from what you learned. Unless someone has an extremely complicated situation with multiple businesses or complex estates, money management isn’t really hard and all the knowledge to do it without much effort is out there

    • It’s true, the more you get perspective, the more you can simplify the core message. Reminds me of a quote by Oliver Wendell Holmes: “For the simplicity that lies this side of complexity, I would not give a fig, but for the simplicity that lies on the other side of complexity, I would give my life.” I take this to mean that sometimes you have to traverse some complexity (education and experience) to eventually arrive at the elegant simple truth. This is true in life as well as financial matters.

  16. The pastor that married my wife and me said the following all the time: “You can never hear true things enough.”

    This post fits that for me. It’s all excellent advice packaged in a bite size morsel. Really good and honest advice.

    I’ll definitely be saving this one.

    As for advice I give to others, one of the biggest is my talk about expectations and reality. This helps set you up for happiness. Your job is to make sure expectations and reality are as close as possible and explaining the expectations to anyone you love (marriage, kids, colleagues) helps other people avoid disappointment. This applies to pretty much any area of life.

    Thanks for the well timed post!


    • Glad you liked it.

      Regarding expectations, I’ve heard it put another way: Happiness = Reality – Expectations

      Maybe not absolutely true, but keeping expectations modest can go a long way to staying grateful for what you do have. And a heart full of gratitude changes your whole perspective.

  17. My goal is to teach my children about money and studying money at an early age so that when they grow up they will be financially independent (from me as a parent at least ;)).

    All of these tips are great advice. I especially like your rule of thumb:
    “A good rule of thumb is never to borrow money for anything that doesn’t pay you back. A few examples: MD degree = yes. House = maybe. Car = no. Vacation to Europe = no. See how it works?”

    Clear, direct, and to the point. It clearly delineates bad debt vs good debt (or at least debt that is not as bad).

    Congratulations on setting up your son for success and sending him out of the nest!!!

  18. This is great advice not just for graduating seniors but for anyone at any age.

    I wish financial education was a mandatory subject in high school and or college. Luckily I do see this as a developing trend (my daughter’s school has it as part of the high school curriculum).

    Although my daughter is 12 years old I have already started planting the seeds of financial planning in her mind.

    I drop her off to school each morning and use that time where I have her as a captive audience. She actually doesn’t mind the conversation as she already is starting to grasp the concepts (I tell her about passive income streams and how that will one day set her dad up to retire without worries)

    Statistics say that majority of generational wealth is lost in the second and definitely 3rd generation. This is because wealthy parents often neglect to teach the financial lessons they learned and the kids begin to feel entitled.

    • Ha, we’re similar (not just because we’re both rads). I feel like a chauffeur, and car trips are great for quick financial discussions. Sometimes we turn on Dave Ramsey and then discuss the issues the callers bring up, especially when it comes to staying out of debt and avoiding the dangers of credit card creep.


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