As my oldest child prepares to take his first full time job, I am compiling financial advice to help him start out on the right financial footing. Here are nine tips I wish I knew as I began my post college life:
1) CREATE A BUDGET: It is an invaluable tool to know what you have to spend and where your money goes. A budget also decreases your stress level because there are no surprises.
2) START AN EMERGENCY FUND: Set aside 5-10% of your pay for emergencies. Build the fund up to 4-6 months of living expenses.
3) CONTRIBUTE TOWARDS RETIREMENT: If your employer offers a 401k, max it out. And don’t forget to take advantage of a matching 401k program.
4) PAY YOUR BILLS ON TIME: This may seem obvious but my son has not had to pay bills yet.
5) PAY YOUR STUDENT LOANS IMMEDIATELY AND QUICKLY: Pay at least $25 over the monthly minimum. Be aggressive and set a goal to pay your debt faster than the term.
6) ESTABLISH CREDIT BUT PAY IT OFF EVERY MONTH: Get a low interest credit card but cap the available credit to $1000.
7) LEARN TO COOK (OR AT LEAST PREP): Eating out is hard on the wallet and on the waistline.
8) START INVESTING: With so many digital options for savings, it is easier than ever to invest on your own and it is fun.
9) FINALLY, LEAVE ROOM TO SPLURGE ON LIFE EXPERIENCES: You will work hard so it is important to treat yourself to some fun.
What financial advice would you give a young adult as they enter the workforce?
My biggest pieces of advice echo yours. Most important for me were to begin saving as soon as you start working and to get into your employers 401k as early as possible. It will pay off in the long run and save you for those emergencies you weren’t expecting.
SUCH A GREAT LIST, Suzanne! I especially love #6! I’m a big proponent of establishing that credit because if you plan on doing anything even remotely adult-ish in the near future, you’ll need to have good credit. But don’t get sucked into the game of credit cards. Like you said, only buy things that you can afford, and pay it off in full at the end of the month. I’ve been doing that since I was 18, and my credit score is in the 800s – an accomplishment I’m super proud of lol.
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