Financial Advice for Graduates – 2026
If you follow my blog, you know that most years I write a post with financial advice for new graduates. It is aimed primarily at Kellogg MBAs but is relevant to any young person navigating the world.
My advice doesn’t change dramatically from year to year: you can see articles from prior years on this blog. Here are two of them: 2019 and 2023.
Kellogg’s commencement is this weekend, so here is my 2026 rendition.
Before jumping in, I should note that I’m a marketing professor, not a finance professor. This advice isn’t based on complex financial models; it is grounded in experience and lots of research and reading.
Save
This isn’t a complicated piece of advice, but it is the foundation of everything. If you save some money, you will have options down the road.
Over the years I’ve come to appreciate just how unpredictable life can be. With funds in the bank, everything is easier.
So, drive cheap cars. Be selective about eating out. Live in a smaller apartment or house than you can probably afford.
Invest in Stocks
People find investing intimidating and complicated, and for good reason: it can be complex and financial institutions thrive on offering new and fancy products.
My advice? Just buy stocks. Index funds are great, so you don’t miss out on the next Nvidia or Apple. Individual stocks are great, too. If you buy fifty different stocks, you diversify your risk and you can avoid most taxes. You can harvest losses and hold the winners until you die – and never pay a capital gains tax.
I’ve invested in different things over the years. Outside of equities, my track record is pretty dismal. A student’s new real estate firm? A complete loss. A new shoe company? A complete loss. A friend’s private equity fund? A loss. The list goes on. Stick with stocks.
Keep it Simple
Life is complicated. There are so many apps, programs to sign-up for, medical forms, new AI platforms to learn…it is overwhelming.
When it comes to your financials, keep it simple: Have just a couple credit cards. Narrow your investments to one or two institutions. Combine old 401ks. Don’t buy or sell investments – just hang on for the long-run.
Skip 529s
If you have kids, saving for college is critical. If you set aside some money when the children are small, it will likely grow into a notable amount by the time they are ready for college.
People love 529s but I recommend UTMAs instead. With a 529 you can avoid some taxes, but kids don’t pay much in tax. A UTMA account will generate a small amount of dividends and, if you just hang on to the investments, no capital gains. The first chunk of dividends are taxed at the child’s rate, which makes them almost tax free.
A UTMA has enormous flexibility. If your child doesn’t want to go to college, they can do something else with the money. If you do well financially in life, you might be able to just pay for college and give the UTMA account to your child to help with a house or invest for the long run.
One positive of the 529 is that the funds are just for education, so your child can’t use the funds to day-trade crypto or buy drugs. I don’t find this motivating: if your child is focused on day-trading crypto or buying drugs, you have larger issues to deal with.
Limit Tax Deferred Saving
Tax deferred saving is popular but less appealing than it looks. If you invest funds in a regular brokerage, you are only taxed on dividends. Capital gains taxes are optional. A traditional IRA or 401k simply defers taxes. You don’t pay tax today, but you will pay tax later. And all the gains and growth are taxed as ordinary income at high rates.
If your company is matching your donations into a 401k, great. Beyond that, put your funds in a regular investment account.
One note: Roth accounts are fabulous since the gains are never taxed.
Be Generous
As a Kellogg MBA, you are likely to find financial success. The skills and connections you’ve honed at Kellogg will be valuable to firms. You might start your own company.
Share some of that prosperity with others. Many of you have been lucky – you’ve had good jobs in your life and good opportunities. You will probably have many more.
Others don’t have that experience. Life isn’t fair.
Consider Charitable Gift Annuities
I’ve recently become a big fan of charitable annuities. The concept is simple: you give money to a charity like Northwestern or Kellogg and in return they pay you a stream of income for the rest of your life.
These do great things. First, you create income. I imagine that it is concerning when you stop earning money. Having income when you are in retirement is a wonderful thing.
Second, you get a tax benefit. Much of your original donation is tax deductible.
Third, you get money out of your estate. If you think that someday you might face an estate tax (perhaps unlikely with the new federal limits but much more possible with state limits) reducing the value of your estate is a very good thing.
Fourth, you benefit the charity. The risk with a typical annuity is that you might pass away before getting much benefit. If you buy the annuity from a company this is a real concern; you don’t want to give lots of money to NY Life or Prudential. With a charitable annuity, if you pass early the charity benefits. So worst case, you are supporting a good cause like Northwestern or Kellogg, and you can feel good about that.
Support Your Friends
People will ask you for donations as you travel through life. Someone might be Walking for Breast Cancer, or Dancing for Diabetes, or Biking for Ronald McDonald house. Or perhaps their kids will be doing something similar.
When you get these requests, give. Always. You don’t have to give a lot, but responding is important. It builds the relationship. You feel good, they feel good.
My policy is simple: I’ll always give something.
Best wishes for productive careers, good friends and amazing adventures.
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