September 9th, 2015 | Miller Advisors

Ten financial tips for first time job seekers

Timing is everything when it comes to taking the right steps towards a secure financial future. For recent grads new to the workforce, it’s not always clear what those financial steps should be. Most college graduates enter the real world as financial planning rookies. This can be daunting, as your 20s are an important time to lay a foundation for financial stability.

Making smart decisions at this age can have a powerful impact on your fiscal future. As the next generation enters the working world, here are 10 tips to get them started on a bright financial future.

1. Create – and follow – a personal budget

For new full-time workers, it can be easy to overspend when they first get accustomed to having a steady income. To avoid this, open a savings account and, using budgeting software or websites, “pay” the savings account first, before any extra spending. Also develop a budget by allocating monthly income for importance–for exmaple, it helps to put things in either a “need” or “want” category, and then prioritize within each category.

2.   Establish an emergency fund

Set aside some money for life’s little surprises–like when a car breaks down, or a family member gets sick and you want to pay a visit. An important part of an emergency fund involves setting aside money to cover three to six months’ worth of expenses, should life throw a curveball. Don’t worry about saving it all at once; just tuck away a certain amount of each paycheck into a rainy day fund.

3. Prioritize debts

Pay off high interest and non tax-deductible debts first, such as credit cards. Getting high-interest debts out of the way will reduce the amount of money eaten up by interest and give the recent grad the freedom to dedicate money toward other goals, like traveling or saving up for a car.

4. Build good credit

Open one credit card, preferably with no annual fee, and make small purchases on it (ideally less than 25% of the credit card limit) to start building good credit. Having a high credit score will make buying a car, taking out a mortgage and borrowing money easier, and, in some cases, even lower the interest rates.

5. Take advantage of reward offers

Different credit cards will offer rewards that can help pad a budget–cash back, airline miles, extra savings, etc. can all contribute small cushions to expenses. Make sure to pay the full amount on time every month to establish and maintain a good credit score, as well as avoid interest payments.

6. Maximize the employer to match to a 401 (k)

Most companies match a certain amount of what employees contribute to their 401 (k). Some employers will match up to a certain percentage of the employee’s salary that is being contributed to a 401 (k). Be sure to take full advantage of that match, if possible, otherwise money is being left on the table.

7. Make sure to ask about employee benefits and insurance plans

It’s important to be aware of employee benefits and make sure they’re being used to their maximum potential. For example, ask about the company’s health insurance coverage and understand the costs and potential costs. Rememer, family plans typically stop covering children at age 26.

8. Keep up with student loans

Loan payment schedules and interest rates can be adjusted to a certain extent (i.e., changing interest rates to fit a shorter payment plan) and there may be a schedule that fits better with how you want to pay them off.

9. Consider a Roth IRA

With any additional funds, contribute upt o $5,500 to a Roth IRA. Contributions made, while non tax-deductible, can grow tax-free and be withdrawn tax-free if done properly. That could mean an overall higher income in retirement.

10. Invest

Finally, as soon as it seems like a viable option, start thinking about possibilities for turning a salary into a plan for the future.

Source: Raymond James | Image: Getty Images