I often hear people ask, “Why didn’t anyone teach me about this in school?” One of the biggest challenges Young Professionals face when entering the “real world” is how to manage money, save for retirement, and understand workplace benefits. Where should you turn for advice? Can you afford to grab Starbucks in the morning, enjoy a Happy Hour cocktail on the weekend, and still take that all-inclusive vacation your friends are going on? While there is no crystal ball, I offer 10 tips to help you get started:
- Educate yourself. The single most important thing you can do is make sure that you take time to educate yourself. While you may not have taken a course on personal money management, resources are readily available.
- Manage your money. Making money, saving money, investing money. Track your finances.
- Budget – Create a budget and pay attention to it.
- Savings – Make sure that you have an adequate amount of liquid savings.
- Goals – Push yourself to set long-term and short-term goals.
- Maximize your 401k. Your employer match is the bare minimum you should contribute. Your goal should be to reach the maximum contribution limit as soon as you can.
- Time value of money. Invest your money early and often. Investing while you are young and continuing to invest over time is crucial.
- Savings for long-term goals and emergencies. Make sure you are prepared to make a down payment on your first home. What happens when the roof needs to be repaired? That engagement ring isn’t going to pay for itself.
- Credit cards. While having a credit card is necessary, carrying a balance is not. Take advantage of credit card rewards but be sure to pay your balance off monthly. If you cannot pay the balance off at the end of the month, you probably shouldn’t buy it.
- Control your credit score. This will follow you forever. Make sure you pay attention to your score and understand how it works. Automatic payments are a great way to avoid having a late payment hit your credit.
- Seek help from a professional. You should have a banker, accountant, attorney, insurance agent, and financial advisor. These are some of the experts you will need to help you along the way. Find people you can trust and lean on them for expert advice.
- Benefits. Spend time reviewing your options before electing employer provided benefits.
- Have fun. At the end of the day, you only have one life to live. It is important to keep a close eye on your finances but remember to spoil yourself occasionally.
