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For Those About to Graduate: Start Planning Now

It won’t be long now. More than 700 graduates will soon step off the Smith campus and into a world of uncertainties and exciting possibilities. Wherever they are and whatever they are doing, many will share a common experience: adjusting to the realities of today’s limping (for now) national economy.

For many, that will mean learning how to balance their income with their expenditures for the first time—joining the rest of the country in cringing at the price of gasoline at the pump, perhaps reconsidering dinner at a restaurant and opting to cook something at home, settling for something already in their closet instead of buying a new outfit for the evening.

“How you plan your finances now can have huge ramifications on how your life will play out,” says Randy Bartlett, professor of economics, who has been meting financial advice to Smith students for several years at the popular Women and Financial Independence (WFI) lunchtime sessions. So establish good financial habits early in life, and strategize for middle and old age while young.

“Money comes in hard and goes out easy,” adds Bartlett, an adage, he admits, he didn’t impress enough upon his three children, now aged 30, 26 and 24. His WFI lectures, he jokes, often consist of “what I didn’t tell my kids when they were college age.”

Bartlett recently offered his views on today’s economy and what Smith graduates might soon face. First things first:


The good news for those about to graduate is that the job market is still strong historically with a national unemployment rate of just over five percent, Bartlett points out. That means most Smith graduates will be able to secure a job, though it may not be their dream job right away.

“These are interesting times,” Bartlett says. “Nobody knows for sure what the economic future looks like. There are industries that will suffer for a long time. But I think most of our students are finding or will soon find something.”

For those who don’t find employment quickly, Bartlett recommends casting a wide net, applying for many different positions, and keeping an open mind about location.

Health Care

Health care is expensive, there’s no way around it. Depending on where you live, there are alternatives to full coverage, such as plans that cover only catastrophes, with high deductibles, an appealing option for some young people. A group plan with employers is often the most affordable package.

For those lacking that option, check what plans are available, says Bartlett, depending on which state you’re living in. Above all, he advises, “Don’t go without some kind of health care. It’s a very high risk.” With today’s prices, one unfortunate accident or malady can turn into years or decades of medical debt.


If you plan to move to Boston, New York City or San Francisco: good luck. Housing costs in those cities, it’s no secret, are among the highest in the country.

“Housing costs depend largely on where you go,” says Bartlett. The same money you might pay for a modest loft efficiency in Chicago could buy a sizeable condo in Utica, New York, or Fargo, North Dakota.

“For most recent graduates, the way to make housing in the most expensive cities possible is to recognize that you will need to find others to share the cost,” says Bartlett. “And that is where the famed Smith network comes into play. Fortunately, there are Smithies everywhere.”

Debt Management

An important issue for recent graduates, student debt will likely play into most budgets for the immediate future. The average Smith student graduates with $20,000 in student loans soon due, says Bartlett. Many of today’s students also graduate with thousands in credit card debt on top of student loans.

Consider management of student debt within the context of other money owed, such as to credit card companies, says Bartlett. “I would recommend being well-educated about student loans, the possibilities for consolidation, the tax consequences and how best to match the payback periods to your individual earnings profile,” he says. “There is no one-size-fits-all formula for handling student loans.”

More importantly, do not get caught in the credit card web of owing more than you can pay off on a monthly basis. With credit card interest rates typically hovering between 16 and 20 percent, it’s a losing financial proposition to carry debt to credit card companies.

Bartlett cites the following scenario in his WFI lectures: If you have $3,000 in credit card debt and pay only the minimum remittance each month, it would take 18 years to pay off the entire balance. That’s a lot of interest.

“Use your credit card and pay off the balance each month to avoid interest payments,” he says. “When it comes to credit card debt, pay it all off as fast as you can.”


Regardless of the state of today’s economy, Smith graduates face “one great danger and one great opportunity,” Bartlett explains. “The danger is out-of-control credit card debt [see Cost of Living below].” The opportunity is to begin a long-term investment program at a young age.

“Take advantage of compounding interest on investments,” he says—the most assertive advice he gives. “If students invest even a tiny amount regularly and let it build for 30 or 40 years, the payoff by the time they’re at retirement age will be astronomical.”

Waiting until your 30s or 40s to invest can cost hundreds of thousands of dollars in potential interest earnings and can translate into a decidedly different lifestyle, he adds.

Cost of Living

Food prices are likely to continue rising as energy costs increase and as the world transitions to ethanol development as an energy resource instead of food. Daily transportation, clothing and entertainment are also on the rise in the current inflationary economy.

Despite today’s high cost of living, lifestyles can be well managed by budgeting, says Bartlett. “You have to be in control of your finances,” he says. “Keep track of where your money is going.” As an experiment, he suggests, write down every time you spend, even in small amounts.

“You’ll be surprised at how much you spend on little things—a coffee at Starbucks, a couple movie rentals, a dinner out. It adds up, and at the end of the day, you have to make sure that what you spend each week doesn’t exceed how much you bring in.”

Happy travels, graduates.


5/15/08   Eric Sean Weld
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