<p>I have lurked these forums for a while and I’ve found them to be full of excellent advice. I’ve seen posts similar to this but I can’t seem to find them now, so I apologize if I could have made better use of the search function.</p>
<p>I’m a recent graduate from a top undergrad school about to start his first “adult” job. I’m lucky that it’s in a field I love, involving the Middle East and government and languages, and I’ll be making about $60,000 per year without long hours, which I’m very grateful for as a first job out of college, and I have only about $10k in student loan debt. The point of this isn’t to brag, but to give context.</p>
<p>Anywho, I’m asking for financial tips because I come from a very low income background and I don’t really know anything about anything. My father is dead and my mother and I have always lived in very precarious financial circumstances, so I’ve never really been exposed to the example of how an adult with a steady job should manage his money. Maybe I’m imagining this, but I feel as though my friends in college had a somewhat better grasp of these skills through example. </p>
<p>I (hope, at least) I have some common sense and I’m sure a lot of money management is learn-as-you-go so I don’t need anyone to reinvent the wheel for me in this forum, but if anyone would be kind enough to pass on a tip or two about things that would be good for a new grad to know, be it about savings, debt, investing, or general money management, I would benefit from it a lot. Or, better yet, if anyone can suggest resources that I can use to teach myself, that would be wonderful too.</p>
<p>Pay yourself first by having an automatic transfer to savings each month or from each paycheck.
Take full advantage of the retirement account opportunities presented to you and maximize the employer match.
If you have the credit and the discipline, get a rewards credit card (cash back or miles or whatever has value for you) and charge routine expenses in addition to clothing, travel, entertainment, etc. HOWEVER, don’t charge beyond what you can pay off the next month to avoid interest charges. While many people only like to use debit cards, if your card is compromised, you’ll be out of commission for a bit while things are straightened out.<br>
Check your bank account and credit card activity frequently (at least a few times each week) for any indication of identity theft.</p>
<p>If your employer offers you the option to invest in a retirement plan of some kind (401K, 403B, whatever), take them up on it ASAP. If they match your contribution, contribute at least as much as they match.</p>
<p>When you get a raise, consider increasing your contribution to your retirement account by at least half the raise amount. Early savings now pays off big later. </p>
<p>Make a budget. Figure out how much you think you will spend every month on rent, food, insurance, gas, etc. Start setting aside some savings for a couple of things as part of that budget: (1) an emergency fund. Build up at least 6 months salary over the next 18 months if you can. (2) Save money for vacations. Use automatic withdrawal to move that money to a savings or money market bank account (NOT a money market fund, that is different). Then budget some for fun stuff (movies, dates, eating out, clothes, whatever).</p>
<p>Try to keep track of how much you are spending in each category so you can figure out if you need to adjust your budget.</p>
<p>Get as much life insurance as you can afford, get as much disability coverage as you can. Start working with a financial planner, work on a good budget and save, save, save.</p>
<p>dstark–because it’s cheap to get now and he will need some eventually. There are other things that can happen in life that makes it so you don’t qualify for life insurance–like illnesses your PARENTS get too. Why wouldn’t someone get life insurance when it’s cheap and you qualify for it.</p>
<p>SteveMA, life insurance through your employer generally can be picked up any year you want to without an exam or any issues. The only reason it might be needed now is to cover funeral expenses… you don’t want to stick your family with those if something happens. It is usually only good for the one year, then next year when you do benefits you just keep it or changes it as you want to. So maybe he should get a minimal amount (1 x salary), unless he needs to support parents or siblings or something. </p>
<p>He could purchase some on the open market. But he can also wait…I got a half million dollar policy at the age of about 35 for $40 a month, with a 20 year term where the price can’t change. That will take me though my youngest kid’s college years. </p>
<p>I do agree about getting disability insurance if it is an option with your employer. You don’t want to be a burden on your family if you become disabled.</p>
<p>A lot of people grow up in suburbs, where owning a car is unavoidable. Then, as young adults, they move to cities. In cities, you often don’t need a car. You may be able to get to where you need to go by mass transit or by walking (especially if you select your neighborhood with a carless lifestyle in mind).</p>
<p>Both of my grown kids live in cities. Neither of them owns a car. This gives them more money to spend on other things.</p>
<p>Unless someone is depending on you for financial support there is no need for life insurance because if you’re out of the picture no one is hurt financially.</p>
<p>Health insurance is though a priority. If your employer provides it great, if not, get some health insurance. Line up a primary doctor for check ups and make sure you go to a dentist regularily too.</p>
<p>For any pension or 401 plans offered by your employer, find a financial advisor to give you advice about them and how to best take advantage of plans offered.</p>
<p>Sorry, but company policies don’t always follow you and you could be stuck. I stand by my suggestion, get as much life insurance as you can afford now. You will thank me when you become uninsurable some day…and company policies never cover enough if you die since you can usually only get up to 5X’s your salary, so your family is good for 5 years, then what??? As for disability, get what your employer offers AND a private plan. your employer coverage will give you 60% of your TAKE HOME PAY–really, can you live off that now?? Sorry, it’ just poor, poor, poor financial planning NOT to take care of the risks first, then worry about the savings because your savings are GONE if you don’t.</p>
<p>I am a fan of Clark Howard. You can learn much from his website and radio show. I would also get several books from my local library and start following a plan that meets your situation.</p>
<p>SteveMA, I agree when you are in your 30s and starting a family to do this. I just think it is an unnecessary expense now. Do you sell insurance? :)</p>
<p>Check out this book: Save Wisely, Spend Happily. It’s on amazon. It was published in 2012 specifically to help young people like yourself manage their money. It is the result of a financial literacy effort by the CPA profession and contains contributions from CPAs and financial experts from all over the country.</p>
My last employer’s plan paid 2/3 of your gross pay and it was tax-free because they set it up so that the paycheck deduction was after-tax. This is pretty much exactly the same as a regular paycheck with taxes withheld.</p>
<p>I agree with SteveMA, it is a very cheap investment to obtain even a 30 year term plan for a twentysomething, protecting their future insurability and having that detail locked in to a low price early on. My kids just got a $500k policy for $300 annually locked in for 30 years, that is truly not a hardship and they are protected in case anything happens.</p>
Use automatic withdrawal to move that money to a savings or money market bank account (NOT a money market fund, that is different). Then budget some for fun stuff (movies, dates, eating out, clothes, whatever).</p>
It is usually only good for the one year, then next year when you do benefits you just keep it or changes it as you want to. So maybe he should get a minimal amount (1 x salary), unless he needs to support parents or siblings or something. </p>