Congrats on your first job! Now start planning for retirement.
The number one factor in obtaining wealth is time. The more years you have until retirement, the more you will benefit from compound interest and automatic reinvestments. Start NOW or you’ll be sorry in 2080!
Capital Budget Strategies, LLC, Austin’s best Financial Coach, has five tips for newly-minted graduates who are entering the workforce. Begin saving now and you’ll be rich enough to enjoy your 30 years of retirement!
TIP #1: Sign up for your company’s retirement program!
This plan is usually called a 401(k) account. Here is how it works: Say you make $1,000 a month and put $100 into a 401(k). Then, rather than paying taxes on the $1,000 you will only pay on $900, the money you put into the 401(k) is tax free until withdraw. You save money on taxes and your investment will grow and grow! Remember, this is the account you will live on in retirement.
TIP #2: Set up a household budget and live below your means!
Your “Means” is how much you bring home every month (take home pay), so spend below that amount. If you get a check for $1,000 each month, your Means is $1,000. Each month put $100 into savings and live on $900. It is called, Pay Yourself First! You can do it!
TIP #3: Continue to live like a student!
We’re not talking about sharing a bathroom with 4 guys or having last night’s pizza for breakfast. We mean don’t go crazy with your new income. Until you save some money, keep the roommate and cheap apartment. Concentrate on learning your new career, not spending your new pay check!
TIP #4: Do not buy a new car!
A friend’s daughter graduated law school and purchased a 2019 BMW convertible. Certainly a nice car, but that Toyota Corolla from CarMax would have saved her $35,000, which could have paid down her student loans. Why add new debt to your old debt?
TIP #5: Do not use credit cards!
OK graduate, here is a math problem: If you make $1,000 a month, how much can you spend each month? Funny as it seems, many young adults spend $1,200 a month by using credit cards and pay 24% interest on that money they don’t have. Yikes. And you got an engineering degree?
Rather than spend all your new income, be smart and plan for the future. Your friends will be so jealous in about 10 years!
Need help getting financially organized?
For only $149 (or $99 for students and new graduates), our Austin Financial Coach at Captial Budget Strategies, LLC will teach you how to handle your money like an adult! Working together, we will determine your true Net Worth, analyze your spending, set up a Household Monthly Budget, an Emergency (aka, “Survival”) Fund and a Snowball Debt Repayment Plan.
Our Austin Money Coach can meet at your office, your home or our home-office. We can meet during the day, in the evening and even on weekends.
Give us approximately 4 hours and begin your journey to financial security and winning your retirement.
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