As many new graduates enter the workforce or young adults find new jobs, what should they know to help them succeed financially?
Financial literacy is lacking in this country. The American Public Education Foundation’s most recent survey of K-12 students’ financial literacy indicates that our country is in a “crisis” when it comes to preparing our children for personal finance and life. decision making.
It is therefore important that parents and caregivers step in to teach young adults some basics to help them succeed. Here are four basic areas to address.
Learn how to budget. A budget is a plan – a roadmap to help you track what you earn versus what you spend. Having a budget in place and sticking to it will help guide you to financial success. Like sticking to a workout regimen or taking piano lessons, it might not always be fun, but practice and perseverance can lead you to positive results.
To create a budget, first write down all of your fixed expenses. These include needs like rent, gas, insurance, prescriptions, and groceries — things you can’t live without. Next, write down all your desires. These include things like entertainment, subscriptions, and travel. Next, identify your monthly income and subtract your fixed expenses. If you have funds left, you can use them for your needs. If your needs are greater than your income, you will have to adjust your expenses so as not to go into debt.
Find out about student loans. Then graduate. Knowing what you need to pay each month is an essential part of your budget. It is recommended that you work with a financial advisor to determine a more advanced repayment plan if your income permits.
Save money for the next big purchase, like a house or a car. Setting a goal for a major purchase like a car, vacation, or house and learning how to save for it rather than spending small amounts now will help to understand the value of setting financial goals. These goals can help create a bright financial future.
Don’t Slack Off – As a young adult or new grad, you may not be 100% sure what you want to do yet and that’s okay. But don’t relax. Update your CV and start the job search process. Talk to friends and family for leads that could launch you into a new career. Join networking groups and follow any referrals you receive. You could also start a new business – that great idea you had. Write a business plan and see if it is viable. Run it by a few people to get their feedback, especially people in this field who can give you tips for success.
If in doubt, ask for help. Figuring things out on your own can be difficult. Look for a mentor or someone you trust to guide you. Even if you haven’t figured out what you want to do, don’t let that stop you from trying.
Coming of age isn’t always easy, but it’s a path we all need to take. Preparing for success now and working on your future from an early age can help make this process a little easier.
Rachel Caballero is Community Development Manager at TruWest Credit Union. Information: www.truwest.org.