How is the financial arena different from when you first wrote your guide for young people?

Young people today want to make a lot of money quickly. They may be living paycheck-to-paycheck, and they’re looking for quick answers. With social media, these quick answers seem to be pretty easy. There’s always this desire to find the best stock rather than investing in a low-cost index fund. The best way to lose money is to try to make it quickly, and you might suffer a really big loss that takes so long to recover from.

The basics are the same: Stay out of debt, save in a long-term retirement plan—even though it has the word retirement, it’s actually a super smart investment plan—and invest in low-cost index funds.

What are some of the particular challenges this age group is encountering?

They have more in student loan debt than previous generations. They have higher credit card debt than their parent’s generation at this age, too.

The other big thing is the job market. That started a few years ago. For the first time in decades, college graduates’ unemployment rates are worse than the average population’s. That has been really difficult for young people.

That’s a big historical change. And of course, people who don’t go to college are having an even worse time.

Any simple advice on paying down debt?

One of the smartest financial moves you can make is to take any savings you have (above and beyond money you need for essentials like rent, food, and health insurance) and pay off your high-rate loans.

The reason is simple: You usually can “earn” more by paying off a loan than you can by saving and investing. That’s because paying off a credit card or high-rate loan that has a 20% interest rate is equivalent to earning 20% on an investment —an extremely attractive rate of return.

Have a question about retirement? Personal finances? Anything career-related? Click here to drop Kerry Hannon a note.

Is there one main thing you would advise people to do to raise their credit score? 

The most important thing you need to know about keeping your credit score high is don’t miss payments. And if possible, the fundamental thing that really matters is paying off your high-rate debt in full each month. So many young people think they need to carry debt on their credit card because that boosts their credit score. That is not true. That is a myth.

For someone graduating this year, what are the best moves to make in terms of their financial life?

Try to get a job. If you can live at home with your parents while you look, do that. If the job has a 401(k), you probably are already signed up for it; if not, do that. If there’s a matching amount of money from your employer for the dollars you put in, at least save enough to max that out. Don’t get into credit card debt. Make sure you know what your student loans are and do not miss payments on them.

If you do those things, you’re very much on your way.

Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky.

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