How To Take Care Of Finances At Start Of Career
Friday, March 4, 2011, 2:10 AM | 1 Comment
You need to take care of your finances when you are just starting out in your career or perhaps you have made some money for a couple of years. You need essential information to get your personal finances in order. You need educating yourself. You need to talk to a responsible and reputable financial adviser. You need to talk openly about your budget and finances to a respected adviser in this field.
I emphasize the word need because that’s what you need to do. Don’t think for a minute that you would take care of finances when you get a lot older, perhaps in your 40s or 50s. The sooner you start, the better and advantageous it would be for you.
At this point in your career, you are tempted to spend more and many times uselessly and save less or worse not save at all. May be you want to show off. May be you want to impress your friends especially your girlfriend. I included the last sentence for guys. They have the tendency to impress their girlfriends by spending money on them.
An overwhelming majority of the guys spend on their girlfriends. It’s not the other way around. It’s not even 50% each. Tell her to pay her f***ing share. She is saving her money for later and increasing her saving account. You are spending now leaving almost nothing and decreasing your saving account if you have any.
You need to educate yourself about personal finances. I am sure in your school or college, you were not taught about finances. Some colleges albeit very few have started offering courses in personal finances but by and large these institutions are completely mum about the subject. The most the colleges do is show you how to balance your checkbook. You need to know a lot more than that.
You need to get motivated. You need to start getting involved in your finances by activating the smartness in your genes. It’s time to smell the latte but not to drink it especially the one with $5 or $6 tag on it.
You need to work on your finances and pay off your student loan as soon as possible. The interest on the loan, no matter how small, is eating your livelihood. You must start working on your finances now to be able to have a bright financial future later.
Find someone who can give you a thoughtful, precise and up-to-date financial advice. Stay away from crooks and scums. You will know them when you meet them. Keep your eyes open. You have earned your money. Don’t give it to someone on an impulse. Do research. Take your time.
Don’t think for a minute that financial life is terrifying. It’s not. It ought not be. On the contrary, it ought to be fun taking caring of your finances.
There are a few basic issues you ought to work on for a better financial life:
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Insurance against Financial Setback
Media report that nearly 20 million people between the ages of 18 and 24 are uninsured. If you are one of them, you need to somehow figure out how to get some coverage even if it is at the very minimum.
Chances are you are insured through your employer. Even then you need to make smart decisions. The most important decision you can make is to take some time out and understand what your employer is offering you. Don’t think for a minute that just because you are young, nothing can happen to you.
The right health insurance will protect you in case you have a serious accident or illness. It will guarantee that you don’t bankrupt yourself and be burden on your family and ruin their life because you didn’t take care of your finances. Needless to say health insurance ought to be your first financial priority. Talk to your Human Resources Representative about your insurance details.
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Pay off your Student Loan
If you have borrowed through government loan, you are probably paying around 9% interest. If you have stashed money in your saving account, that’s probably collecting dust in terms of less than 2% in interest you get. Do your own calculations. You save a lot more if you paid off loan and the sooner you pay it off, the more money you save. It requires little or no mental effort.
If the interest you pay is way too high, call the lender to reduce the rate. If you have several different types of debt, pay off the loan with the highest interest rate first.
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Contribute to Retirement Plan
You are young. You think you need every penny to spend right now. But in reality you don’t. You can save money in the long run by contributing to your retirement account at your place of work. Many employers will match a portion of the amount you put into a plan like 401(k).
The benefits of employer-matching and tax-deferred growth outweighs the worries you might have about losing your money. In the absence of 401(k) plan from your employer, open up an IRA account. In any case, make definite plans to save for retirement.
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Have Automatic Savings Plan
You always save when you save before you spend. You very seldom save when you spend before you save. Your employer can automatically make a direct deposit to your saving account from your paycheck. That’s a relatively painless way to force yourself to increase saving.
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Consider Investing
If you want to be more aggressive in your finances, you can invest in stocks and bonds. Decide how much risk you are willing to take. Dollar-Cost Averaging method of investing is usually a better way to invest.
In a Nutshell
You know what Bernard Shaw said? He said “Youth is wasted on the young.” Did he know something about the young at his old age? If he did, you could prove him wrong about your youth. You can prove that the young can be as responsible as the old if not more.
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