How should I organize my finances once I’m accepted to HBS?

I am a 25 year old who was recently accepted by HBS and I am trying to organize my finances appropriately. I will work until July of next year so I can save some cash, but should I also lower my 401k contribution? Additionally, did any of the students trade financial securities for their personal accounts while you were there?

The Harvard MBA Says:

Bear in mind that this particular Harvard MBA is not a registered investment advisor or tax professional, and that the economic conditions were, to put it mildly, somewhat different when I attended HBS.  That being said, I would advise you to continue your 401k contributions.  Because 401k contributions are both pre-tax and tax-deferred, they are tough to beat.

While you will want enough cash on hand to pay for HBS and enjoy yourself along the way, there are probably better ways to raise that cash than by diverting money that could be reducing your taxes and paying for your retirement.

When I was in school, the major banks would essentially loan you however much money you wanted, figuring that HBS students are good credit risks.  While times are different, it certainly seems like HBS is working hard to keep loans available, though the losses in Harvard’s endowment may eventually cause problems.

As for your second question, I can assure you that many HBS students continue to be aggressive investors.  I even had friends who didn’t need loans, but took them out anyways so that they could lever up and invest more in the stock market (I do NOT recommend this approach, but it did happen).

Finally, my hearty congratulations on your acceptance.  You’re about to have a wonderful two years.

One Comment

  1. Chris G
    Posted December 27, 2009 at 11:03 pm | Permalink

    Thank you so much Chris!

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