Lay a solid foundation for your career by being smart with money from the outset
You’ve graduated and are now ready to strike out into the world of work — or at very least the world of applying for work.
While you are likely now saddled with student loan debt, hopefully along the way through college you’ve mastered the basics of budgeting, credit, and maybe even managed to start putting a little bit of money aside.
What now though? 独立 asked a selection of certified financial planners for their top tips for the recently graduated as they take their first steps on their chosen career paths.
Know your value
“It’s always important to know your worth and understand the strengths you bring to the job market,” says Shannah Compton Game, host of the Millennial Money 播客.
“You can research the average pay for your career path on sites like Glassdoor. Knowing how your skills are valued will help you negotiate a strong starting salary,” she adds.
Akeiva Ellis, financial planner and educator with Ballentine Partners, concurs: “Do that research and ensure you’re being paid fairly for any position you’re offered. This is vital.”
“It is important to know what you are being offered,” notes Autumn Lax, a financial planner at Drucker Wealth. “Take the time to compare what each company is willing to give before making a decision.”
Sketch out your budget
“Before you accept any new position, whether it’s your first or job or not, create a mock budget,” advises Ms Ellis. “Pretend you are working at this company, with the offered salary, and include all of your fixed expenditure to make sure the numbers all add up.”
“A lot of people forget about this, as you’re coming out of college and you’re about to earn probably the most money you’ve ever made in your life,” she adds.
“It may sound like a lot, but don’t forget about how your monthly expenses will change too — just rent and utilities will eat into that amount. That’s why a mock budget is so important.”
There are no right or wrong answers as to how you spend your money. Everyone has different priorities and circumstances. Some will make savings in an area that others will prioritise as important to them.
“Remember though,” says Ms Ellis. “Your budget is not set in stone, it evolves as you do. This is not a one-time exercise.”
Work out a student loan repayment plan
Once you’ve landed a job, it’s time to start repaying the debt you’ve accrued over your time at college.
You are likely in this for the long haul, and it will look like a sizeable chunk of your budget as you plan it out.
“If you have student loans be sure to call your loan servicer and understand all of your repayment options,” advises Ms Compton Game.
“Many plans offer income-based repayment options that will be based on your salary and benefits in the years post-college when you’re growing your career.”
Build your emergency fund
再次, as part of your budgeting process, see how much you might realistically be able to set aside for a rainy day or put towards that potential big purchase you might have in your future.
Mark Wernig, CFP and principal at Dowling & Yahnke Wealth Advisors, 说: “Once you’ve set up your primary checking and savings accounts, you’re going to want to set up recurring savings contributions that, quite frankly, you don’t want to have to think about.”
He adds: “It’s really going to allow you to slowly build that nest egg of that three to six months of savings that I think any adult wants to have just in case of the unforeseen. 当然, something to prioritise when you can.”
Be smart with credit
“Start practicing good credit card habits by treating your credit card like a debit card and paying off the balance in full each month,” suggests Ms Compton Game.
Paying off your credit card will keep your credit utilisation low and help avoid paying interest — which as you may already know from college, can get you into big problems if left unchecked.
“Be aware of your credit score by using mobile apps like Credit Karma or Credit Sesame,” she advises.
“If you’re new to credit, consider becoming an authorised user on a parent’s credit card or a jointly owned car loan to begin to build your score.”
Don’t leave anything on the table
One of the most important things to consider when starting your first job is the total compensation package. What this means is that there is a lot more to your pay than just salary!
“Consider all of the company benefits, such as insurance, time off, and equity in the company,” says Ms Lax, at Drucker Wealth. “Employer-provided benefits can go a long way towards helping boost your bottom line.”
Ms Lax notes that if part of your compensation includes equity this means that the company will compensate you, in addition to your base salary, with company stock that has the ability to appreciate.
“Certain conditions usually have to be met but the short of it is, this can add big bucks to your income in the long run even if it doesn’t look that way on paper right now,” she notes.
Mr Wernig agrees that you have to fully understand any benefits that come with a job, including when you’re eligible to participate in your employer’s retirement plan; what kind of matching opportunities exist, and what kind of bonus structure may be in place?
“This is all going to come back to that financial plan, that budget that we’re creating,” says Mr Wernig.
“There are plenty of young adults out there, that actually aren’t fully aware of what money they may be leaving on the table by simply not understanding their human resource package.”