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To members of the class of 2016: Congratulations! As you look forward to all the opportunities that await you, know that this will be a very important year for your financial future. It's not just because your graduation likely marks the beginning of your career, but also because the choices you start making today will have wide-reaching impacts on your ability to build wealth throughout your career.

Financially speaking, you have some incredible assets while you're just starting out -- assets your older coworkers could only dream of. Use them well, and you will dramatically improve your chances of a very comfortable financial future. Squander them, and by the time you realize what happened, you'll look back with regret at what could have been.

What you have going for you
As a new graduate, the three big assets you most likely have going for you are:

1) Your ability to live like a broke college student.

2) The decades you have between now and when you reach retirement age.

3) The nearly boundless energy of youth to let you put in just a little more effort.

It may not seem like those matter all that much if you compare what you can buy on your paycheck to all the trappings of status your boss may display. Still, despite the fact that they don't directly add dollars to your pocket, they really are your best assets when it comes to building wealth.

Your ability to live like a broke college student gives you the chance to stretch your paycheck farther than someone who is already tied down with the costs of a mortgage and family. Live cheaply enough upon graduation, and you might actually find that you're able to save more than your higher-earning and more-experienced boss and coworkers.

Even if you can't save more than them, getting started immediately in the habit of living inexpensively and socking away money is perhaps the best financial gift you can give yourself. Don't compromise on your safety or your health, but do question every expense, and figure out if there's a cheaper way to get the things you need and a way to cut back on the things you don't need to free up cash.

The temptation to spend can be huge when you're just starting out. A new car, new furniture, new work clothes, and a nice place to live generally top the list. While you do need a place to live, work-appropriate clothes, and a way to get yourself to and from your job, you can keep those costs down.

For instance, if you share an apartment, you can save on rent and furniture costs. If you're willing to wear last season's styles, you can save on your work outfit. And if you're willing to drive a safe, reliable used car, you can keep your transportation costs down substantially, as well.

The decades you have between now and when you reach retirement age give you a tremendous opportunity to put time on your side, and benefit from compounding. Say you have a goal of becoming a multimillionaire with $2,000,000 to your name by the traditional retirement age of 65. The table below shows how much you need to save each month, depending on the rate of return you earn and the age you start:

Age When You Start

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns









































Table calculations by author.

Over the long haul, the stock market has delivered returns near that 10% annualized level. Because you have decades to go before you retire, that chart shows that you have two benefits over your coworkers. First, you have the ability to save less each month than your older coworkers to get to that multimillionaire level. Second, because you have decades to go, you also have the ability to let your money ride the market's ups and downs along the way, because those returns don't come in a straight line.

Even then, there are no guarantees that the market will continue to deliver at its historic level. Still, you have the advantage over your older coworkers. If you save and invest as though the market will deliver less than it has historically, you still need to sock away less than your older coworkers who put off getting started.

The nearly boundless energy of youth gives you the opportunity to put in a few more hours to collect overtime, work a second job, and/or speed your advancement at your job. Any extra money you can earn above and beyond what you need to support a basic lifestyle is money you can put toward your future goals.

As you're just starting out in work, your salary today will likely be well below what you can command when you're more experienced. You can make up for that with your ability to put in a little extra effort today, thus earning both more money, and some of the experience you'll need to earn more in the future.

Class of 2016, seize the day!
As a new graduate, you have incredible potential and amazing opportunities in front of you. As you start your life, be sure to take advantage of the unique assets you have as a new graduate to put yourself on the path to incredible financial success. This is a one-time opportunity available to you as a new graduate; if you leverage it, your future self will be incredibly glad you did.