Courtesy of Lily Faust
When Lily Faust graduated from college in December, she was fortunate enough to get a job right away.
She was also able to move alone, with her roommate, to an apartment in Montclair, New Jersey.
“I’m very proud of myself,” said Faust, 22, now a first grade teacher in New Jersey.
“I was a broken student who just tried to make ends meet,” she added. “It’s really nice to have my own money and to be able to support myself.”
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It is a good time for young people to invest in the markets
I did it with careful planning.
Faust worked part-time while attending Stockton College in New Jersey and started his own online clothing business. This allowed him to save for a down payment on an apartment. Now she’s saving $1,000 per paycheck for student loans and an extra $1,000 per paycheck to survive this summer when she’s not getting paid.
Transitioning from school to the world of work and adult money is not easy. However, starting on a good financial footing can allow you to succeed later.
to save money
Certified financial planner Kathy Curtis, founder and CEO of Curtis Financial Planning in Oakland, California, said many young people consider get-rich-quick when investing.
“A lot of young people have a distorted view of how to invest in the markets,” she said. “They invest in IPOs, companies that they think are great.”
In fact, she said, you should invest in index funds and watch your money grow slowly.
Therefore, you should open a 401(k) if your employer offers one and you contribute at least until the company matches, she said. If this is not available, you must open a Roth Individual Retirement Account.
If you wait too long to start, you’re missing out on the compound interest that can really make your money grow, said CFP Tom Henske, managing partner at The Affluent Insurance Advisor based in New York.
Selon une analyse du gestionnaire d’actifs Vanguard, quelqu’un qui commence à économiser 10 000 $ par an à 25 ans dans un 401 (k) avec une contribution de contrepartie et arrête à 40 ans aura plus d’un million de dollars à retirement.
Someone who starts at age 35 and saves $10,000 a year over the next 30 years will get $838,019 in retirement, according to Vanguard, which used a 6% hypothetical annual return and didn’t take inflation into account.
It’s also important to set aside money for emergencies, separate from retirement savings.
Make a budget
Budgeting basically keeps track of the money that comes in, like your salary, and what goes to pay the bills.
Henske advised that when setting your budget, treat your savings as a bill.
“If you start with things like going out at night, eating out, socializing, you’ll just save what’s left,” he said. “Do not do this.
“Start with what you memorize and put everything else around.”
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Curtis said if you don’t have a checking account, open one. The same goes for a credit card, as long as you use it responsibly and don’t accumulate debt.
“Building credit is the foundation of your financial life as an adult,” she said. “The sooner you start the better.”
Your credit affects everything from your ability to get a loan or rent an apartment to the amount of interest you’ll pay on any loan.
If a credit card isn’t a good option right now, consider setting up credit with a secured card, which is guaranteed by the money you deposit into the account.
I’m looking for a job
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Although the inflation rate is high and there are concerns about an impending recession, college graduates are generally finding a positive job market at the moment, according to reports.
The number of entry-level jobs posted on LinkedIn rose nearly 17% in the first three months of 2022 compared to the same period last year, according to the social media giant. According to the National Association of Colleges and Employers.
All this, along with a tight job market and a so-called great resignation, gives graduates confidence. According to the job site, four out of five college students believe they will get a job offer that matches their career goals at Monster.
“Job seekers are in the driver’s seat,” said Vicki Salemi, a career coach at Monster. “They have the biggest advantage [over employers] in the job market for beginners.
His advice: Find the right person, which means looking at benefits in addition to salary, asking questions during the interview process, communicating with family, friends and teachers, and negotiating any offers you receive.
Understand your benefits
Once you have a job, be sure to understand the benefits of your workplace, especially financial benefits such as pensions, insurance, and health savings.
Henske said be sure to purchase long-term disability insurance, which will cover you if you need to be absent from work due to illness.
When it comes to health insurance, he believes that young adults should choose a high-deductible plan because they don’t use insurance in their 20s as much as they do later in life.
This way, you can open a health savings account, which allows you to contribute tax-free money. This money also grows tax-free throughout your life and withdrawals are tax-deductible, as long as it’s used for eligible health care expenses.
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