As another college graduating class enters the real world, please use this opportunity to give them the only formal lesson they likely didn’t get in college.

That lesson is real world finance 101 and how to live fiscally responsibly and within your means.

There are many new grads looking for work related to their newly minted degree. It’s important to get started on the right foot, but that right foot may not be what they’d call their ideal job. Encourage them to do something productive; it is not a good idea for them to sit around idly until that perfect opportunity arrives for them. Ask your new grad to work somewhere, even if it is doing the same thing they did for last summer’s job. It may be just as important to eliminate career choices at age 22 as it is to find their first dream job. Even a new grad is more desirable to an employer when they display energy and resourcefulness while seeking a better opportunity.

Do not over support them while they live above their means. If the alternative to them moving back home is subsidizing an apartment for a specified period, then I understand. That is a lifestyle choice for you and your child; just ensure that the cost fits into your financial plan. But when employed, it would be good learning for them to see exactly what their level of earnings can sustain, without a subsidy. Somehow that seems to help with career focus. Regardless of how low their earnings may be, encourage them to start a regular savings program. This is a good habit that will be hard to break once they get used to having savings. Furthermore, real life brings real surprises and costs that may not have existed while in school. In addition to new expenses such as rent and transportation, learning to build savings as a cushion against the unknown is important at any age.

If they have access to benefits and a retirement plan, use them. While your youngster may not need health insurance if they can be covered under your health plan, they should have disability income protection and possibly life insurance if they’ve got student loans or other obligations. Regarding the retirement plan, suggest they consider contributing to a Roth 401K. They will not get a tax deduction for the contribution, but in 40 years when they want to draw down those assets, they’ll be thanking you for the lack of income taxes levied on those Roth distributions. As their earnings and tax bracket grow, a deductible 401K may make more sense.

A will and health care directives are also real-world necessities for many new grads. The grad without assets may not need a will, but if there are any children or a start-up business, anyone over age 18 should have a will. The health care directives may be more significant. At age 18, mom or dad’s ability to make health care decisions on behalf of the adult child can only be achieved through this document.

John P. Napolitano CFP®, CPA, PFS, MST is Founder and Chairman of Napier Financial in Braintree, MA.  Visit for more information. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investment and financial planning advice offered through US Financial Advisors and Great Valley Advisor Group, Registered Investment Advisors.

By John P. Napolitano CFP®, CPA, PFS, MST Founder & Chairman Read More