5 Money Tips for Young Professionals
By Nicole PolancoJune 22, 2018
Being a recent graduate, I realized how unprepared the younger generations are when we’re entering the work force and investing in our financial future. I have compiled some tips for young professionals, whether you are a recent graduate starting your first job, or you graduated a few years ago. It’s never too late to plan for your future!
Consolidate Debt
The most important piece of advice not just for recent grads/the younger generation, but for anyone, is to consolidate all outstanding debt before accumulating any savings, mainly in the form of student loan and credit card debt. Do not only pay the minimum amount due! With rising interest rates, you could end up paying more than just the calculated interest.
Track All Spending
Today, there is a lot of technology out there to help track and manage spending and to help establish a budget. Some great examples are eMoney, Digit, and Mint. All these systems allow you to get a big financial picture of where you stand with regards to all of your expenses and assets. Viewing all credit cards and mortgages in one place can help in getting a better sense of where your money is going and keep track of bill due dates to avoid any interest charges.
Prioritize 401K
Having an early conversation with your employer about your retirement account options is very important. Depending on what type of company you work for, you could be missing out on extra retirement money. Look to see if your company offers a profit sharing plan, matching, or any other extra perks to help grow your retirement account. If your company does offer matching, always contribute the maximum percentage that your company will match to get the highest benefit. If they do not, still start out at a percentage of at least 10% and grow as you get more established. Maxing out an IRA ($5,500 per year) is another smart move for retirement.
"Having an early conversation with your employer about your retirement account options is very important. Depending on what type of company you work for, you could be missing out on extra retirement money."
Establish an Emergency Fund
A good rule of thumb is to keep at least three months of living expenses aside. Most people keep their emergency fund in cash, but it is a better idea to invest this cash in liquid securities for two reasons: so it is easily available (if needed) and, it’s allowed to grow while not being used, instead of sitting in cash and not growing.
Keep Recurring Expenses Low
When it comes to recurring expenses such as rent, cars, meals, etc., try to keep them low. For example, try and live with a roommate or in a neighborhood that may be a little further away from work, but can cost significantly less. An extra ten minutes of commuting can translate into hundreds of dollars less in rent.
If you’re living in a big city, most times it is not necessary to have a car, especially with all of the added expenses of insurance and parking costs. If you are required to have a car because of your job, do extensive research to get the most cost effective car in your state. Depending on which state you live in, a lease may be the better option instead of purchasing.
As tempting as buying breakfast, lunch, and dinner may seem, the expenses add up. It is estimated that the average person with a typical 9-5 job can waste up to $3000 a year on meals alone as opposed almost half of that being saved when prepping your own meals. Set a budget for meals as that is where most of the expenses you incur during the week, especially as a young professional.
Nicole Polanco is an Associate Wealth Advisor at Chicago Partners Wealth Advisors. She graduated from the University of Illinois Champaign-Urbana with a B.S. in Finance and is currently working towards her CFP designation.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC-“CP”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember that if you are a CP client, it remains your responsibility to advise CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. CP is neither a law firm nor a certified public accounting firm, and no portion of the blog content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: CP does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to CP’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
June 22, 2018
Being a recent graduate, I realized how unprepared the younger generations are when we’re entering the work force and investing in our financial future. I have compiled some tips for young professionals, whether you are a recent graduate starting your first job, or you graduated a few years ago. It’s never too late to plan for your future!
Consolidate Debt
The most important piece of advice not just for recent grads/the younger generation, but for anyone, is to consolidate all outstanding debt before accumulating any savings, mainly in the form of student loan and credit card debt. Do not only pay the minimum amount due! With rising interest rates, you could end up paying more than just the calculated interest.
Track All Spending
Today, there is a lot of technology out there to help track and manage spending and to help establish a budget. Some great examples are eMoney, Digit, and Mint. All these systems allow you to get a big financial picture of where you stand with regards to all of your expenses and assets. Viewing all credit cards and mortgages in one place can help in getting a better sense of where your money is going and keep track of bill due dates to avoid any interest charges.
Prioritize 401K
Having an early conversation with your employer about your retirement account options is very important. Depending on what type of company you work for, you could be missing out on extra retirement money. Look to see if your company offers a profit sharing plan, matching, or any other extra perks to help grow your retirement account. If your company does offer matching, always contribute the maximum percentage that your company will match to get the highest benefit. If they do not, still start out at a percentage of at least 10% and grow as you get more established. Maxing out an IRA ($5,500 per year) is another smart move for retirement.
"Having an early conversation with your employer about your retirement account options is very important. Depending on what type of company you work for, you could be missing out on extra retirement money."
Establish an Emergency Fund
A good rule of thumb is to keep at least three months of living expenses aside. Most people keep their emergency fund in cash, but it is a better idea to invest this cash in liquid securities for two reasons: so it is easily available (if needed) and, it’s allowed to grow while not being used, instead of sitting in cash and not growing.
Keep Recurring Expenses Low
When it comes to recurring expenses such as rent, cars, meals, etc., try to keep them low. For example, try and live with a roommate or in a neighborhood that may be a little further away from work, but can cost significantly less. An extra ten minutes of commuting can translate into hundreds of dollars less in rent.
If you’re living in a big city, most times it is not necessary to have a car, especially with all of the added expenses of insurance and parking costs. If you are required to have a car because of your job, do extensive research to get the most cost effective car in your state. Depending on which state you live in, a lease may be the better option instead of purchasing.
As tempting as buying breakfast, lunch, and dinner may seem, the expenses add up. It is estimated that the average person with a typical 9-5 job can waste up to $3000 a year on meals alone as opposed almost half of that being saved when prepping your own meals. Set a budget for meals as that is where most of the expenses you incur during the week, especially as a young professional.
Nicole Polanco is an Associate Wealth Advisor at Chicago Partners Wealth Advisors. She graduated from the University of Illinois Champaign-Urbana with a B.S. in Finance and is currently working towards her CFP designation.
Important Disclosure Information
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.