The current class of college graduates is leaving their campuses and universities with more than a diploma. Attached to that diploma is a price tag that has reached and exceeded the $1.2 trillion mark in outstanding student loan debt. This means that young professionals are entering the workforce owing more money than they will earn for years to come.
In addition to student loan debt, graduate have to consider other expenses that they may not have had to experienced before such as payments for car notes, credit cards, rent and utilities. This means the amount of disposable income available to graduates is decreasing more and more with each added expense.
Diminishing amount of disposable income is the number one problem that financial advisors face with young professionals when explaining how important it is for them to buy life insurance or contribute to a 401(K) retirement plan. Premier Financial Alliance understands the problem of diminishing disposable and has provided a few money saving tips for young professionals to follow.
The dreaded “b word” that so many people, young and old alike, hate with a passion. Everyone wants to believe that they can afford everything they want all the time. Having to put together a budget puts into perspective that they can’t. Instead of looking at budgets like a bad thing, synonymous with not having enough, Premier Financial advises that young professionals consider budgeting as a means to ensure that you do have enough. Creating a monthly, itemized budget of your gross income and deduct your expenses (rent, bills, subscriptions, etc). This will help you to determine where your money goes and what you can trim down. The act of budgeting is the first tool to finding additional funds for essentials like life insurance and retirement.
There’s a phrase in the financial industry that says, “Pay yourself first.” You may think this sounds crazy when you look at your expenses and the amount on your paycheck, but it’s important to consider. Premier Financial advises that it is essential to put some money away for yourself to take care of unexpected expenses. This could be the loss of a job, repairs on your home or car, or even to help cover expenses if you are injured. Setting aside a rainy day fund, no matter how little a month, can go a long way to provide for anticipating the unexpected. The sooner you start saving, the better.
One final tip that Premier Financial Alliance suggest is where to store your money. “Never put all of your eggs in one basket” is the soundest advice in the financial industry. Most people think that keeping all of your money in one place makes it easier to access all of your funds at one time. However, it also puts all your money at unnecessary risk. Instead, open up a different accounts for your checking and savings at different financial institutions. Many employers allow you to have your paycheck divided between multiple accounts. By protecting your savings, you can also segregate the money you need to pay bills from the money you want to save so you won’t be tempted to spend before you save.