Dear Christine,

I just graduated from college and I’m making decent money. The problem is that I have no idea what to do with my money. I hear everyone talking about real estate or investing, but I’m lost. I don’t even know where to start. Right now, my money is just sitting in my checking account and I figure there must be a better place, right?

– Money in my pockets, 23, Detroit

Dear Money in My Pockets,

You have an upscale problem. Most young twenty-somethings are facing the opposite quandary: they have no idea how they are going to pay off loans, manage their debt and afford rent. So congratulations on either being really smart or really lucky (or maybe both).

I commend you for having the sense to handle your money wisely rather than spending it just because you have it. I can also understand feeling confused about what to do with the dough in your checking account. Investments, real estate and money management were all topics I was clueless about when I graduated from college even with a Cum Laude diploma MSOffice in my hand. It always boggles my mind that we have to take Econ classes in college, but we never actually learn how to invest and make our money work for us.

My first suggestion before you do anything is up your financial IQ by reading a few books on money management or investing. Also, investigate Learning Annex or college extension classes that offer financial tips and guidance. Since one-on-one advice is particularly helpful when it comes to money, consider setting up a meeting with a financial advisor at one of the big financial institutions or banks (like Charles Schwab, Meryl Lynch or Citigroup). You don’t need to be rich to have a money manager and most advisors will take you in for a free consolation. They can explain your options and help you diversify your financial portfolio.

While you are educating yourself about what investments you want to make, a simple thing you can do today is to put your money into a savings account that bears interest rather than having it sit in a checking account. Also, if your company offers a 401K, be sure to get in on that and also see if your company matches your investment up to a certain amount. This could help tremendously as the dollars can add up quickly. If your company does not have a 401K, then talk to a financial planner or your financial representative at your bank to set up an IRA. Remember, it’s never too early to start saving for your retirement and the younger you start, the more you will have.

Also, while long-term investing is great, you want to have some liquid funds to cover any emergencies such as needing a new engine in your car, a computer that crashes, or medical or dental care that insurance may not cover (and if you don’t have health insurance, that should be your first investment!). Look at your finances, talk to your advisor or someone you trust who is well educated about money, and figure out the long and short term investments that fit your schedule.

To offer you even better advice, I turned to Ramit Sethi who is the founder of, , a blog on personal finance and entrepreneurship for college students, recent college grads, and everyone else. Here’s what he has to say: “Most people confuse being successful with being rich. They think they’re successful if they buy and sell stocks all the time, or invest in hedge funds, or even own lots of property. If you read the investment literature, it’s actually much easier than that: think long-term, invest consistently, and pick a good set of low-cost investments. For your situation, you’ll want to max out your 401(k) match, max out your Roth IRA (it’s $5,000 this year), and then max out the rest of your 401(k), in that order. This will let you invest up to $20,000 right off the bat.

I’d encourage you to invest in low-cost index funds. Pick up some good books, The Bogleheads’ Guide to Investing and Suze Orman’s books will get you started. Look online for some great sources like and That’s really the key: getting started. You don’t have to watch CNBC every day or stop spending on the things you love. By being conscious about what you spend and putting aside a set amount for saving and investing, you’ll be rich over the long term.”

And to add a bit more of my two cents, don’t feel like you have to have it all figured out by your 24th birthday. You still have time to educate yourself while saving your money – so don’t jump off the real estate cliff just because your friends are doing it (do I sound like your mother?). Being smart about money is investing; throwing money around just because you have it is just plain spending.

– Christine