I'm an Investment Professional: These Are the Three Money Tips I'm Giving My College Grad

College grads can help set themselves up for financial independence by focusing on emergency savings, opting into a 401(k) at work (if it's offered) and disciplined, long-term investing.

By James Martielli, CFA®, CAIA®

published 18 July 2025

in Features

A proud father arranges the mortarboard of his college graduate daughter.

(Image credit: Getty Images)

Every year, June is a month for "dads and grads," and this year was particularly poignant for me, as the dad of a high school graduate and a college graduate. Our middle daughter graduated college and just started her first, as she puts it, "big-girl job."

Instead of piecing together a handful of part-time jobs around her school schedule, it's her first full-time job with a full-time commitment.

She's excited about the prospect of a steadier paycheck, as it opens the potential for long-term financial success, but she's also a bit nervous about some more serious adulting.

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Perhaps you have a child, grandchild or someone you hold dear who is also just starting out. How can you help them transition to financial independence?

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

I'd encourage recent graduates to focus on three areas: Developing an emergency savings fund, taking advantage of their employer's 401(k) match if they offer one and making disciplined, long-term investments.

No. 1: Develop an emergency savings fund

First things first — start by establishing an emergency savings fund. According to research from Vanguard, having just $2,000 in savings can provide a critical buffer, reducing the likelihood of financial stress and enhancing overall well-being.

This is especially important for those who are new to the workforce, as the financial stress associated with not having emergency savings can spill over into the workplace and impact productivity.

Workers without emergency savings are four times more likely to be distracted at work due to financial stress.

Vanguard's new consumer survey also found that 71% of Americans plan to shift their savings approach this summer to prioritize emergency savings and flexibility, especially in light of current market uncertainty.

With this in mind, it's important to create an emergency savings fund containing at least $2,000 or half a month's expenses, whichever is greater, and to put this money in a high-yielding savings vehicle, like Vanguard's Cash Plus Account, to help you earn stronger returns on your savings.

My daughter's spending account was earning practically zero interest, so she set up a high-yielding savings vehicle, with the account features she desired, to help her earn stronger returns to bolster her savings.

And remember, you don't have to get to your savings goal all at once. Young investors can start small by automating a portion of their paycheck, even $10 or $20, to a high-yielding savings vehicle to help build a savings buffer.

No. 2: Take advantage of your employer's 401(k) match

Retirement may be one of the furthest things from the mind of a young investor — it's a classic "important but not urgent" goal. But if an employer offers matching contributions, it's important to take advantage of them.

Many plans offer matching contributions of 50 cents on the dollar — or even dollar for dollar — up to a certain percentage of pay.

The match is free money. Any matching contributions from your employer, and their associated earnings, usually become yours over time in a process called vesting
The money you contribute to the plan is yours — and yours alone — from day one

Find out if your employer offers a matching contribution and make sure you're saving enough to receive the full benefits.

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There are long-term impacts of missing out on employer matches that can compound over time and lead to a significant gap in retirement savings compared to a colleague who took advantage of this match.

And if your employer offers a Roth 401(k) option, younger investors may want to consider choosing a Roth 401(k) over a 401(k) if you believe your current tax bracket will be lower now than when you retire.

No. 3: Make disciplined, long-term investments

The lines between gambling and investing are blurred like never before — and many brokerages are enticing their customers to trade more frequently.

That's why it's important to develop a disciplined approach to long-term investing. Vanguard has always prided itself on its four principles for investing success:

Create clear, appropriate investment goals
Keep a balanced, diversified mix of investments
Minimize cost
Maintain perspective and long-term discipline

All investors — especially young ones — can leverage these principles in their investing journey. And it's important to remember that all investing is subject to risk, including the possible loss of the money you invest.

Starting a new job brings with it great opportunities and responsibilities. By developing healthy habits now, young investors can set themselves up for long-term financial wellness and independence from the "Bank of Mom and Dad."

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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James Martielli, CFA®, CAIA®, heads Investment Product, Personal Investor, which is responsible for designing and enhancing Vanguard's brokerage and investment product offer, amplifying distribution efforts and shaping the investment methodology that fuels unmatched investment and savings outcomes for our clients. Previously, James led Investment & Trading Services (ITS), which educates individual investors about Vanguard's products and provides trade execution for the securities and products on Vanguard's retail brokerage platform.