12 “Hard Truths” For Graduates to Help Them Not Be Broke


I occasionally get the opportunity to talk about stewardship and money with young people (high school and college age). I am always grateful to get the chance and I always enjoy the interactions.

We are near the end of the school year, a time when many will be graduating from high school or college. So I thought it would be fun to write an article about the “hard truths” about money and stewardship I would want to share with any young adult that is heading off to college or out into the “real world” of work.

They’re called “hard truths” for a reason.

It’s a well-known fact that many young adults are not as financially literate as they might be. Personal finance is seldom taught as a high school or college course.

According to the National Association of Student Financial Aid Administrators (NASFAA), based on a survey by EverFi, “Students preparing to begin college and take more control over their personal finances in many cases lack the skills and knowledge to make responsible financial decisions and repay their student loans.”

The EverFi survey gathered data from a sample of over 100,000 incoming college students at more than 410 four-year institutions across the country, and reported that “Most respondents struggled to answer basic financial literacy questions, and on average only answered two of six questions correctly.”

Since very few of the regular readers of this blog are under age 35, I would encourage you to forward this to your son or daughter, or grandson or granddaughter, if you think it would be helpful to them. Don’t let them become one of the “only two out of six” crowd.

The “Hard Truths”

If you are young and just starting out, wise stewardship (handling God’s money God’s way) is actually less about literacy and more about behavior. Sure, there are some things you need to know, but what you do is most important.

And a lot of what you need to do will be hard—and that’s the truth! Why, because it’s not what everyone else does and it’s hard to be different. Plus, it will be hard because you won’t necessarily want to do them, or they will take time, patience, and perseverance.

Here are some of the major ones that can have a big impact on your financial future:

Hard Truth #1:  Many people in the U.S. are “broke.” And if you’re not careful, you could end up broke too, even if you get a good education and a good job after you graduate.

What do I mean by broke? Well, here’s how Dave Ramsey describes it:

You don’t have to be living out of your car to be broke. Broke is living paycheck to paycheck with no savings intact. Broke is being in debt up to your eyeballs. Broke is buying a brand-new $30,000 car because you can ‘afford’ the monthly payments but not having enough in your bank account to cover a $1,000 emergency.

A recent study found that 40% of Americans can’t afford a $400 emergency! In other words, they’re broke!

I would add that “broke” also means spending so much on yourself that you don’t have anything left to give to your church or others.

And Dave also points out, “the funny thing is, we live in a culture that calls this type of living normal.” And sadly, for many people, it is.

You know the beautiful cars and big houses you see all around; well, in many cases, the people don’t “own” them—the banks do. And those folks are making big payments and paying a lot of interest or lease payments for the privilege of living in the bank’s house or driving the bank’s car.

They may look rich, but in reality, they’re broke!

Sorry to break it to you, but if you’re a teenager, your parents may be “rich” (most are, at least by any global standard), but you are (technically) poor.

But at least you’re not broke—not yet anyway. And as you get older, you may be less poor, or you could even become “rich” (based on your income). However, you could still be “broke,” at least by Dave’s definition.

And if you aren’t careful, you may stay “broke” for a long time, even if you are earning lots of money. Some things take a long time to recover from.

And this is where the rest of the “hard truths” come in… 

Hard Truth #2:  Pursuing a rigorous major in college that qualifies you for a high-demand field is more likely to keep you from being broke than getting a less challenging major from a more prestigious school.

Lots of students are drawn to prestigious universities. They are convinced that the name of the school and its reputation will ensure they have a bright employment and income future.

There is probably some truth to that, but it probably has more to do with the network of alumni connections than anything else.

In reality, your best chance at landing a job that will help you to be not-broke is to acquire a set of knowledge or skill that is in high demand—think “STEM”: Science, Technology, Engineering, and Math.

A report from the National Association of Colleges and Employers (NACE), says that: “Bachelor’s degree graduates earning STEM degrees are expected to earn the highest starting salaries from the college Class of 2019.”

This is not to in any way demean those who pursue such majors as education and fine arts. The world needs teachers and writers and designers and historians just like everything else.

But to spend four years and a ton of money to get a fine arts degree at a high-cost, prestigious university with the idea that the school’s name alone is a virtual guarantee of an excellent employment opportunity with a high salary, is unwise.

If that is your chosen field, go for it, but better to spend less, knowing that you are probably going to earn less and enjoy your chosen field with passion and contentment.

A final thought: You could also consider becoming a mechanic, plumber, electrician, HVAC technician, or carpenter instead. They can earn a good living and are always in demand—just sayin’.

Hard Truth #3:  Student loans can make you broke, and keep you broke, for a long time after you graduate from college.

Outstanding student loan debt has become a big economic problem as it has skyrocketed over the last decade. Total student loan debt now exceeds $1.4 Trillion; the average student loan per household (those that have student loan debt) in 2018 rose to $47,000!

This ties in with #2, above. For many, especially those who attend high-cost schools, their level of debt is disproportional to the future earning potential that their area of study may enable them to realize.

If you leave school with an English Literature degree and $100,000 in debt, you are probably going to have some big challenges. (There is absolutely nothing wrong with an English degree, but you will probably be on a long, slow road to paying it off.)

Starting out life and a career in a financial hole due to a lot of student loan debt is not good for anyone, except maybe the banks. Many students don’t realize until they try to start paying off these loans how much of a toll they will take on their future happiness, well-being, and financial freedom.

A survey done by the American Institute of CPA’s of people with student loan debt found that around 40% delay saving for retirement, buying a car, buying a home; some even delayed getting married.

Plus, a lot of them said that they did not realize that it would be so hard to pay off their college debt when they signed up for it. In fact, about 60% said they actually regretted taking out student loans in the first place.

There are things you can do: Start out in a low-cost community college. Work while you’re going to school, even if it takes longer to graduate. Apply for every scholarship you can. Consider living at home while attending school to save money. And if you must borrow, stick with Federal loan programs if at all possible.

Hard Truth #4:  The best way not to be broke is to spend less than you earn.

Duh! I know I am stating the obvious, but this is the best way not to be broke. If you get this wrong, everything else goes south in a hurry.

By spending less than you earn, you will give yourself “liquidity” (available cash on hand to meet planned and unplanned needs) and you create financial “margin” (which means that after you pay all your bills you have some extra money each month which gives you the freedom to give and save, and maybe spend on something extra, as God directs).

In other words, you will have some flexibility; you will have options instead of being controlled by immediate needs—you will not be broke.

The best way to spend less than you earn, especially if you are dealing with a lot of debt, is to keep living like you’re a college student after you graduate. (Dave Ramsey calls it the “beans and rice” lifestyle.) You may need to practice extreme frugality until you get your debt under control or your income increases dramatically.

Then, once you right your financial ship, you can spend more; but even then, there are some more hard truths to keep in mind.

Hard Truth # 5:  One of the most effective ways to manage your spending so that you aren’t broke is to use a budget.

Ahhh…the dreaded “B” word, but it’s not nearly as bad as it sounds.

I like how Dave Ramsey defines it: “A budget is telling your money where to go instead of wondering where it went…give every dollar a name. Every dollar has a destination.”

There are basically four things we can do with money: spend it, borrow it, give it, or save it. People who wisely manage their money have to continually evaluate what the good, better, and best uses of their money (and other resources) are based on biblical wisdom.

These four categories of using our money are “simultaneously competing priorities.” The simple idea is that the money we spend on one thing can’t be used for another.

The best way to deal with this is to establish priorities then set up a budget and manage to them. Want to save more? Make it a priority. Need a better car? Save for it. What to be more generous? Give off the top, not just the leftovers. The list goes on.

Hard Truth #6:  Once their incomes increase, lots of people stay broke because their fixed expenses are too high.

As you get older and your income goes up, you may start buying things like houses and cars. You may also decide to get married and have children.

Then, you will need appliances, furniture, and other things. Plus, you will want to insure all that stuff. The trick is to keep your FIXED (stay constant) expenses low, your VARIABLE (can change) expenditures under control, and manage your discretionary expenses (fun money) well.

This is key to maintaining margin. Houses, cars, and debt can comprise a disproportionately large percentage of our total expenses. Houses (i.e., mortgage expenses) can be the biggest problem. Many people are “house poor,” meaning they spend too much of their after-tax income on housing.

Dave Ramsey recommends that you spend no more than 25% to 28% of your TAKE HOME PAY on your mortgage, and to get a 15-year mortgage if you can possibly swing it.

If you can’t afford to buy, then rent and save up until you can. Buy used cars instead of new, and avoid high-interest auto loans (especially “buy-here/pay-here” auto dealers who rely on a cycle of selling, repossession, and reselling to make their money).

Hard Truth #7:  Credit cards can make your broke. They aren’t money, and neither are loans on houses or cars or other things.

Debt is “negative wealth.” Loans aren’t assets on your balance sheet – they’re liabilities, meaning you are liable (responsible) for them. (They’re assets for banks.) Some types of loans may be “OK,” but none of them are absolutely good, at least not from a biblical perspective.

One of the reasons so many people are broke and stay broke is that they have too much debt.

When you buy something on credit or take out a loan, you don’t have money (wealth), you have debt, which is the exact opposite (negative wealth) – you have “negative capital.”

Mortgage debt is usually the largest, but the average U.S. household with credit card debt has an estimated $7,000 in revolving balances or balances carried from one month to the next (paying only the minimum due) and at high interest rates.

So much for the “I’m going to get a credit card for the ____, (fill in the blanks) and I will pay it off every month.” Statistically, only 18% do.

If you insist on using a credit card, then make sure you use them as a tool, not as money—credit cards are a tool to spend money you already have, not to spend money you don’t.

There are LOTS of problems with the debt-funded lifestyle, and one of the biggest relates back to #6: Money you spend on debt payments can’t be used for anything else (like giving or saving).

Big Truth #8:  Even if you aren’t rich, if you have a positive “net worth,” you won’t be broke.

Your net worth is what you own (includes money, investments, possessions) minus what is owed. And remember our definition of “broke” is no margin for saving or giving, which equates to having a negative net worth.

If you are in your late teens, and even in your 20s, there is a good chance that you currently have a negative net-worth. Sorry, but it’s true.

Building your net-worth starts by earning an income, spending less than you earn, eliminating debt (especially student loans) and avoiding most debt (especially credit card debt), and then consistently saving for the future.

Why save? To pay for a future anticipated need. Also, for emergencies (your car breaks down, you lose your job), near-term budgeted payments that you know are coming (such as insurance payments, Christmas, etc.), short-term needs such as replacing worn-out items (computers, car tires, etc.) and long-term needs such as retirement.

You can do this on your own (in a bank, brokerage, or mutual fund account), or you can participate in your employer’s retirement plan. The latter is the best option because it usually comes with some goodies, such as employer matching contributions.

Hard Truth #9:  Participating in the U.S. economic system of democratic capitalism by investing is by far the best way to grow wealth and help avoid being broke.

Once you are saving, you need to put your money to work for you by investing (not speculating!). Other than owning a successful small business, this is probably the best way to grow your wealth.

By investing, you can take advantage of something Albert Einstein called the “8th wonder of the world.” It was NOT his theory of relativity, but compound interest! He said, “He who understands it, earns it … he who doesn’t … pays it. Compound interest is the most powerful force in the universe.”

Okay, he got the “most powerful force in the universe wrong” (although it may be the most potent mathematical force).

In any case, you want to get the power of compounding interest working for you, not against you like it does in debt (reverse compounding). And the sooner you do, the better, because its less about how much you invest and more about how long you invest it.

Investing biblically is NOT speculation, which is gambling on future events, usually with borrowed money. Stock tips, get rich quick schemes, etc. require you to take too much risk for the low possibility of a high return—bad idea.

One of the best ways to invest is to own part of a company that provides a product or service that people want or need. There are only 2 ways to do that: own a company (or part of one), or buy “shares” of a company (own stock).

Capitalism has been getting a bad rap lately, but the US system, despite its shortcomings, is the best economic system for wealth creation and lifting individuals and families out of poverty that the world has ever known.

You can participate in it in literally thousands of ways, but investing in companies by owning stocks or stock mutual funds is probably the best, especially when you’re young and have time to ride out the inevitable ups and downs of the markets.

Hard Truth #10:  Keeping everything for yourself will make you “spiritually broke,” even if you are rich.

Remember the parable of the rich fool in Luke 12? He had much but was spiritually bankrupt. Why? He was consumed with himself; he was only focused on this life, not the life to come. God was a non-factor. He thought he was clever, but God called him a fool.

So how can you avoid becoming a “rich fool”? You do it by storing up in heaven—by giving your time, energy, money, and skills (time, talents, treasure) for the sake of the expansion of the Kingdom of God.

In “hard truth #5,” we talked about all the things you can do with your money. Of all of them, giving is the most rational, and the most fun.

But it’s hard to give when you’re broke (you can’t give what you don’t have). Only the prosperity gospel preachers will tell you to put your gift on your credit card and trust God to pay it off for you.

That brings us back to the need to create enough margin so that you can give something (even if it’s only 1 or 2 percent). Then, as your income increases, perhaps you can do more. (Increase giving in one or two percent increments as your income increases, but you will need to keep expenses in check.)

As income increases (toward mid-career), a giving target of at least 10% (the biblical tithe) should be more attainable, and you may be able to give beyond that, perhaps well beyond. (It’s about proportionality, not percentages.)

Many people, including those with higher incomes, think they can’t afford it to give. Based on the principles of giving and blessing (not just financial) that I see in the Bible, I would say that “you can’t afford not to.”

Hard Truth #11:  If you get your financial advice from broke people, you may end up broke too.

You will be bombarded by messages and advice about money and finances from many different directions. But what is your best source of sound advice?

First and foremost, you can trust God’s wisdom as found in the Bible. Of course, it doesn’t always give us a lot of specifics, but it is full of principles that you can apply no matter what age you are.

The overarching biblical principle is stewardship, but moderation in spending, wise planning, saving, and investing, and sacrificial generosity, are all taught in Scripture.

Next, you want to seek wise counsel from people who have “been there, done that.” Pursue input and advice from people who manage their finances based on biblical principles and can help you do the same. Start with your parents and other adults in your church that you trust.

Dave Ramsey has a saying: “Getting advice from broke people is like taking a shop class with a teacher with missing fingers.” That rules out your broke friends and a lot of the bad advice on social media.

One of the best things you can do, especially when you are just starting out, is to educate yourself on personal finances.

There may come a time when you will need professional advice. When Dave Ramsey talks about financial professionals, he suggests finding people who have the “heart of a teacher.”

Look for someone competent, experienced, trustworthy and honest. You want someone who would never sell you anything you didn’t completely understand. It also means someone who will look out for your best interests and not just their own.

Hard Truth #12:  Your Christian faith will not make you rich, but it may help you not to be broke. And even if you are broke, you may still be “rich” by any global standard.

We are blessed to live in the most prosperous country in the world. Even if you are “broke,” if you have a place to live, a car, and food and clothing each day, you are richer than 99% of the world’s population.

But you may not be “rich” by U.S. standards. And, contrary to what the prosperity gospel crowd says, your faith will not make you “rich” in this life. In fact, living as a disciple of Jesus will cost you.

Following personal biblical principles may help you not to be broke, but there is no guarantee that they will make you wealthy. God is sovereign in how he distributes wealth; he gives more to some than to others to manage on his behalf.

The Bible tells us that there are things that are better than worldly wealth: “A good name is to be chosen rather than great riches, and favor is better than silver or gold” (Proverbs 22:1).

In closing…

I would summarize my advice to you this way: Love God and not money. Steward all of your resources (time, talents, and treasure) well, and use them as a way to worship and serve God and to bless others, not just for yourself. Do this, and you will probably not be broke financially, nor will you be “broke in spirit.”


👋 Hi, I’m Chris Cagle, the founder of Retirement Stewardship, a blog that focuses on the various aspects of retirement from a Christian stewardship perspective (1 Peter 4:10).

I write as a retiree who is dealing with the things I write about. I base most of the articles on my research and experience applying it to my situation and how it might apply to yours.

If you’re new here, check out the site introduction for an overview. You can also learn more about me.


My Books

Redeeming Retirement: A Practical Guide to Catch Up (2021)
The Minister’s Retirement (2020)
Reimagine Retirement: Planning and Living for the Glory of God (2019)