Young man sitting on a lot of money after college.

How to make a lot of money after college

Websites like to list hundreds of ideas on how to make a lot of money after college, but few of them actually explain what’s realistic and the strategy you’ll need. The truth is that building wealth is about the process of building up your savings, not catching some lucky break or being the one-in-a-million startup founder.

This is how to build wealth when you’re just starting out after graduating, step by step.

Reduce your living expenses

First things first: figure out your living situation and cut down the cost of rent as much as possible. Look at this chart: notice how housing is the single biggest expense for people under 25 in America? That represents about $13,000 USD per year, and cutting it down even a little bit is your number-one way to save money.

 

Bar chart of average living costs for Americans under 25 years.

 

Living from home after college is the single best way to do this because it can let you eliminate rent fees altogether. In fact, you might be able to eliminate most of your transportation costs and food costs by living at home as well, if your parents are generous.

This is important because making money after college isn’t just about what you earn: it’s about what you keep. Penny-pinching isn’t going to make you rich, but cutting out even one of your largest living expenses creates an opportunity to put your dollars toward savings (or debt).

Living within your means today creates financial habits that will give your dollars twice as much mileage once you get a job.

 

Find a good job (with a strategy)

With a financially lean lifestyle in place, the next step is to focus on finding your income. Forget the myth of starting a business after university—the average founder is 40 years old. That’s 16 or more years of post-college experience that recent graduates just don’t have.

And that’s okay!

There are more reliable ways to make a lot of money after college than becoming an entrepreneur. The most obvious one is to find a good job (it’s kind of the running theme around here).

Learning how to get a job is the best way to earn money in the short and medium term because it gives you the ability to pay down student debt and accumulate your early savings—while developing skills and growing a network along the way.

It takes recent graduates an average of 7.4 months to find a job compared to the 4 months it takes everyone else. How much longer do you think it will take to start a successful company with no experience?

 

Bar chart comparing job search time of recent graduates to older professionals.

 

Follow this 7-step process instead of banging your head against the wall:

  1. Write a quantified resume.
  2. Create a killer LinkedIn profile.
  3. Make recruiters and job boards work on your behalf.
  4. Start your own work experience.
  5. Make a portfolio website.
  6. Learn to network like a real professional.
  7. Turn interviews into business consultations.

You need to gain skills, experience, and a network if you want to succeed in life, whether that’s through a salary or starting your own business. Both paths almost always start with learning how to find a job after college, though, and that’s where this process comes in. It’s why I wrote an entire ebook about it.

 

 

If you’ve already completed all 7 steps from that process then you can look further afield to gain an even bigger competitive edge in the job market, including:

  • Acquiring industry certifications.
  • Familiarizing yourself with industry software.
  • Joining professional development groups (especially online).
  • Networking into your dream companies, one person at a time.
  • Starting side hustle or freelance business.
  • Investing in new skills, both soft and technical.

All of these things can lead to new opportunities, higher salaries, and even further learning opportunities—it’s like a snowball effect. All of that experience commands a higher salary, which gives you more earning power.

 

Pay off student debt first

Let’s talk about compound interest for a second. It can do two things for you:

  1. Compound interest can work for you.
  2. Compound interest can work against you.

Investing your money makes it work for you (more on that below), but student debt makes it work against you.

In fact, all debt works this way. The interest charges on loans are precisely how banks and credit unions make their money on loans—and student loans are no exception.

Student loans have become an incredible burden for individuals to bear, too. The average student debt ranges from $28,000 to $38,000, depending on the source. This is why the average debt after college is so high these days.

 

 

It will only grow through compound interest the longer you leave it unpaid, too. That’s why paying down student debt is the third-most important step in making a lot of money after college. Paying down the debt now saves you from paying even more debt down the road.

How much money can you expect to pay down that debt, though?

The average starting salary after college looks a little bleak for those just starting out, with the average being under $30,000 USD for all disciplines, according to the Association of American Colleges and Universities.

 

Bar graph comparing salaries at graduation and peak careers between graduates of the liberal arts, professional programs, and STEM programs.

 

Other data suggests that graduate wages make an average of about $20 per hour across all disciplines, where it has hovered within range of a dollar since 1979 (adjusted for inflation). It just doesn’t feel that way because the cost of education and housing have increased significantly while the job market has become more competitive than ever.

 

An area chart of entry-level wages for college grads from 1979-2013, adjusted for inflation.

 

It’s also worth noting that, among paid internships (roughly 60% of them), the average intern makes $14 per hour. You might need to take an internship after college to bridge the gap between school and your career, so it pays off to plan for a fairly low wage at the outset.

That’s why it’s so important to save as much as you can on housing, food, and transportation: it frees you up to pay off your student debt as soon as possible. This lets you get started making money after college that much sooner.

 

Earn extra income with freelance work

At this point in the process, you should have these elements in place:

  1. The cheapest living situation possible.
  2. A job, or being in the process of getting one.
  3. A savings plan to pay down your student debt.

That covers the basics of making money and building wealth. You can take it another step further by freelancing, too. Instead of working overtime at your day job for the hope of getting a raise, you can just work additional hours for yourself and carry that extra income with you wherever you go.

 

 

In fact, freelancing at an early age is one of the best ways to get a job for these reasons:

  • You get to develop important soft skills, like sales, outreach, light project management, and team building.
  • You can hone technical skills that you wouldn’t be able to practice without a job.
  • Your network expands with every lead, reference, and acquaintance you make as a freelancer.
  • Your personal brand gains extra legitimacy because people pay you for a service.
  • More money ends up in your pocket.

How much money can freelancing make, you ask? Great question. According to a study from Payoneer, This is how much freelancers make worldwide (including countries with lower costs of living than the United States).

 

Bar graph showing the mean hourly rates for 13 different freelance jobs from around the world (in U.S. dollars).

 

  • Project management: $28 per hour
  • Multimedia production: $25 per hour
  • Sales: $25 per hour
  • Programming: $25 per hour
  • Marketing: $25 per hour
  • Finance: $23 per hour
  • Information Technology: $23 per hour
  • Translation: $20 per hour
  • Web + graphic design: $19 per hour
  • Content writing: $15 per hour
  • Customer support: $15 per hour
  • Quality assurance: $13 per hour
  • Administration: $10 per hour

That’s pretty consistent with Indeed’s overall figure of $21.75 USD per hour for freelance work.

I’d advise you to freelance in your core area of work or in something related to it so that you can bring all of that experience back to your day job to justify a raise, or to find better opportunities in the same field.

If you’re not sure what to do, then start with this list.

  • Content writing
  • Bookkeeping
  • Researching
  • Tutor local students
  • Become a tour guide (after the pandemic)
  • Manage social media profiles
  • Babysitting or pet-sitting
  • Outreach services
  • Administration

 

6 illustrated freelance jobs to make more money after college.

 

I’d recommend checking out Side Hustle Nation for ideas on how to make money in your spare time. I’ve been listening to Nick Loper’s podcast for years and it’s worth your time.

 

Start investing early

Investing is the most reliable way to make a lot of money after college, as long as you’re patient. Growing your money alongside the market can turn you into a millionaire by retirement. 

This isn’t a crash course on investing. Others can do that more effectively. This is the case for why you should start investing as early as possible after you’ve paid off your student debt.

It’s not as hard as you think, either.

 

 

First off, you’ll already have a savings plan in place if you’ve worked hard to pay down your debt. Simply redirect those monthly savings toward investing instead of accruing in your checking account.

You have several good options:

  • American graduates can open registered investment accounts like a Roth IRA or a 401K.
  • Canadian graduates can open registered investment accounts like a TFSA or an RRSP.
  • You can also invest in index funds through robo advisors like Wealthsimple or Wealthfront.

Why? While bachelor’s degree holders earn approximately $1,000,000 more than high school graduates in their lifetimes, much of that will be spent on the costs of living. Regularly investing your savings will result in lifetime savings that can support you through retirement with ease instead of being left with nothing at 60 or 70.

You might even make enough money to retire early, if you invest super early! 

The average annual return on the S&P 500 stock market has been approximately 10% per year, which is a higher rate of growth than most real estate holdings (and without the mortgage debt).

 

Bar graph showing S&P 500 annual returns from 1928-2020.

 

You just keep investing with automated contributions, letting time and compound interest do the heavy lifting. It’s pretty simple and it can replace your income by or before retirement age.

What’s the alternative? Inflation already causes money to lose value by 1-3% per year on average, making investment growth the most reliable long-term way to make a lot of money after college.

 

That’s the process to building wealth! It’s not about get-rich-quick schemes or even becoming a CEO. It’s about living well within your means, building the skills to kickstart your career for income, and creating a savings routine to pay down debt and then build up investments.

Happy hunting out there!

Andrew Webb

Andrew Webb

Founder of the Employed Historian, Andrew entered the working world with two history degrees and zero technical knowledge. Then he worked on those technical skills and discovered something profound about the liberal arts. By day he's a professional search engine optimization specialist and content marketer at Webb Content.

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