College is behind you — ahead lies a whole world to experience and new challenges and opportunities to undertake. It’s an exciting time, and it’s inarguably one of the most important periods in your life.
Many of the decisions you make as you transition from school to work can impact the quality of life you experience throughout your career, as well as in retirement. You need a solid financial plan to go from dreaming about the life you want to living it.
The financial professionals at Good Life Morehead City can help you lay the groundwork for your financial future. Here’s what you need to know, along with a handful of tips to start you off on the right foot.
What Is Financial Planning?
Financial planning is about looking at where you are financially and developing a plan for getting where you want to be. It requires you to evaluate your income, expenses, and debt, determine your goals and values, and figure out the best way to experience the life you want.
The following tips can help ensure that your plan succeeds where you need it to.
Write Down Your Goals
Knowing what you want to do can help bring your future into focus, whether it’s next year, next month, next week, or even tomorrow. Write down what you want to do, see, and experience or what you hope to accomplish. Doing so can give you a concrete target to aim at.
Don’t forget to count among your goals the things you must do that will affect your financial situation, such as paying off student loans or other debts like credit cards.
Create a Budget
To get where you want to go, you must know where you’ve been and where you are. Being able to afford your desired lifestyle demands that you take stock of your financial circumstances, tracking what you spend and where.
The easiest way to do this is by creating and sticking to a budget. While budgets are often characterized as shackles on spending, the opposite is true — the closer you adhere to your budget, the more you’ll have to spend on what truly matters.
One useful approach is the 50/30/20 rule: use 50% of your take-home income to pay for necessities (housing, utility bills, etc.), 30% to pay for wants (like dining out or streaming subscriptions), 20% to put money aside in savings and investments.
Start Paying Down Your Student Loans
If you don’t have student loans, great! But if you do, pay close attention to the repayment plan your provider has outlined. If you have federal student loans, you may have a grace period of six months. Incorporate this expense into your budget and mark it on your calendar to ensure that you make the necessary payments on time.
Save Where You Can
You might be wondering why you need to start saving — after all, you just began working. While retirement might seem too far off to consider, your future self will thank you for socking money away early.
Saving and investing now allows your money to take advantage of compounding interest. The longer it remains in a savings or investment account, the more it can grow.
At your new job, put what you can in your employer’s 401(k) retirement plan or open your own individual retirement account (IRA). Your employer may provide a match in your 401(k). That’s like free money, so save as much as possible to get the full benefit.
Part of your savings should also go to creating an emergency fund. Try to build up to three to six months’ worth of your expenses to get started. An emergency fund can keep unexpected setbacks from derailing your plans.
Build Your Credit Score
Building and maintaining a good credit score can save you money later through lower interest rates and can ensure that you have the credit you need to buy your first house. Get in the habit of paying your bills on time, all the time.
If you have credit cards or other debt, start paying it down so your credit utilization is no more than 30% of what you have available. Timely payments can reduce what you owe and keep your score buoyant.
Get the Financial Planning Help You Need
Tips like these can help you form healthy spending habits and lead to good money management, giving you a head start on the financial future you want. If you’re ready to come up with a comprehensive financial plan, the advisors at Good Life Morehead City are eager to learn about your goals and dreams.
We invite you to set up a no-obligation discovery meeting to discuss your situation and long-term objectives and learn more about why we may be a good fit for you.