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Tech billionaire Robert F. Smith surprised Morehouse’s graduating class when he announced he would pay off their student loans. His generous gift could amount to $40 million.
However, the gift he gave those 400 young men is priceless and will change the trajectory of their lives. For one, they get to graduate and enter the workforce without student loan debt.
Parents who cannot afford to pay off their children’s student loans, shouldn’t think there’s nothing they can do to help their children. There are other great ways to empower recent graduates.
In this article, I share three amazing books that set graduates up for financial success. This is vital since very few students take courses about managing their finances while in school.
The Burden of Debt
Without Smith’s gift, on average, each Morehouse student would’ve had $100,000 of student loan debt.
Unlike Smith, many parents are not in a position to pay off their children’s student loans. Furthermore, approximately 44 million Americans have the burden of student loan debt. They share a total of $1.36 trillion in student loans.
Even if you are in a financial position to write a check to erase your children’s student loans–think twice before doing it. You shouldn’t pay off the debt of your children if you still have your own debt or do not have enough saved for retirement.
Besides, I believe paying student loans taught me valuable lessons. I learned how to pay my bills on time and built good credit.
The Gift of Knowledge
Empower your graduate with knowledge. With the right book, you can teach them how to pay bills, pay off debt, and save for retirement. Get your graduate ready for their career and a head start with their finances.
I recommend you buy graduates one or more of the books below. If they are anything like me — reading one book will spark their interest in practicing better financial habits for the rest of their life.
Rich Dad, Poor Dad by Robert Kiyosaki
My father bought me Rich Dad Poor Dad by Robert Kiyosaki, when I was in high school. This book inspired me to open a Roth individual retirement account (IRA) at 16 years old, and I have been saving for my early retirement ever since.
In my Roth IRA, I invested after tax dollars into a retirement savings account. Over time, this income has grown and earned interest thanks to the stock market. Later, in retirement, I will enjoy this money tax free since my initial investments and the gains are not taxable.
It’s important to invest in a Roth IRA while you are young and still within the allowed income ranges. Any tax free income you build will give you a huge boost in retirement. It also shelters a portion of your wealth from Uncle Sam.
Today, I also max out my retirement savings with my employer and take advantage of matching funds. If I keep this up, my retirement will be well funded.
Read: Habits of Financially Savvy Women
The Automatic Millionaire by David Bach
Later, while a student in college, I read The Automatic Millionaire by David Bach. This book taught me the power of saving and investing automatically. After reading this book, I set most of my bills on auto pay. I also started investing. At the time I didn’t have much, but I saved $25 each paycheck.
As I made more money, I saved and invested more–automatically.
After marriage, my financial habits and auto saving mindset didn’t change. This helped my husband and I save $100,000 for our second home, just a few years into our marriage. Our investments and savings grew little by little. Then, one day we had enough to purchase a single family home for our growing family.
21 Day Financial Fast: Your Path to Financial Peace and Freedom by Michelle Singletary
A few years ago, I discovered the 21 Day Financial Fast: Your Path to Financial Peace and Freedom By Michelle Singletary. I wish I read this book sooner. While reading it, I immediately, put my family on a shopping freeze so we could reevaluate our household needs and expenses.
At the time, we had just moved back to Washington, D.C. after living three years overseas. We had to pay a mortgage and utility bills again–two expenses we didn’t have while living abroad. When we lived overseas we rented out our home, so a tenant paid the mortgage.
This reflection and reassessment helped us find where we could cut expenses and tackle more debt. It’s how we completely paid off the remainder of my student loans and car note in one year.
Today, I still recommend these top three reads for financial literacy beginners. Check them out and purchase them for a graduate or anyone else that might benefit from the knowledge — including you.
Rich Dad Poor Dad by Robert Kiyosaki
The Automatic Millionaire by David Bach
21 Day Financial Fast: Your Path to Financial Peace and Freedom By Michelle Singletary
Money Saving Apps
Graduates could also benefit from using Acorns and Stash, two money saving and investing apps. With as little as $5 you can start investing in the stock market. App subscribers also get newsletters about financial literacy so they can learn while they earn.
What are some of your creative gift ideas for graduates? Share with the PoM Community in the comments below.
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