As college students, we’re often told to think about our future careers and what we want to do when we grow up, but rarely are we asked how to get there. The College of Financial Planning has created an infographic showing their top 10 tips on how to get there most quickly and effectively possible. Follow their advice to get your dream job with less effort!
1) Save more
Saving money is one of the best ways to ensure you have enough funds when life takes an unexpected turn, whether it’s buying your first home or taking care of an aging parent. No matter how you use it, saving is essential—and your 20s are a great time to get started. Take advantage of any matching-fund offers from your employer or government retirement account, like IRAs and 401(k)s, if you can. And try opening up and contributing to at least one high-yield savings account every month until you’ve saved as much as possible. You never know what might happen in your financial planning condition in 2022!
2) Spend less
It’s common advice, but it’s also easy to forget that spending less is one of your best strategies to build wealth and prepare yourself for financial goals. As you start working on reaching any money goal—and saving more as you progress towards it—you need to realize that success will largely hinge on curbing your desire to splurge on things you don’t need. The more money you can save, after all, the quicker you’ll reach any financial goal you have. And there are plenty of ways to do so without sacrificing your lifestyle or health.
For example, you could: Cook at home instead of eating out; carpool with coworkers; bring lunch from home; or skip pricey drinks at happy hour (or better yet, go for water). If you spend less than $50 per week on food away from home, it adds up to $2,600 annually. So even if you’re only able to cut back by just $10 per week at first (which would be $520 per year), you’d save nearly enough money in one year alone to cover a six-month emergency fund! Bottom line: You can easily afford to spend less if that means building more wealth over time.
3) Invest wisely
Whether you’re saving money in an investment account or putting it toward your retirement, make sure you're focusing on what's going to give you (and your funds) the best return. Sure, there are plenty of other things that can be important to consider—like feeling more secure with certain investments—but if all else is equal, save some time and do some research to figure out where you'll get back what you put in. For most people, low-cost index funds have emerged as one of those investments that rarely underperform; plus, they are largely hands-off. A solid 401(k) plan should offer several of these options for workers.
But remember: A good long-term investment isn't always necessarily a good short-term investment. If you need access to your cash sooner rather than later, think about moving at least part of your portfolio into high yield savings accounts or CDs that offer better interest rates than traditional savings accounts. As always, never invest in anything without first doing some research into its value and risk factors—the same goes for financial planning itself! The field is continually evolving and changing as new technologies emerge so stay up to date by reading articles from reliable sources like The Wall Street Journal and talking with industry experts.
4) Borrow only when necessary
When we were in college, student loans were not an option. But now they are, and they’re often easy to get—and easy to get into trouble with. If you need help paying for college, don’t hesitate to take out a loan—just be sure you can pay it back after graduation. A $500 loan from your parents may seem like small potatoes now, but if you have trouble making payments once you get a job and start earning money, it could grow into something much bigger.
Also, avoid credit cards. They offer no tax benefits (unless you use them for tuition) and are expensive ways to borrow money. They also tend to charge higher interest rates than other forms of borrowing because they offer convenience—it’s easier to swipe a card than write a check or pull cash out of an ATM. Be smart about how you spend your money: Don’t assume that simply because you have more cash on hand that you should spend more. Use tools such as Mint or Personal Capital (both free) to track where every dollar is going so that when times get tough (as they inevitably will), there won't be any surprises as far as what expenses need cutting first.
5) Keep your credit score high
Your credit score is an important number that lenders use to determine whether or not they’ll loan you money. The higher your score, the more favorable you look to potential creditors. Many things can impact your credit score, and keeping it high will help you as you launch your business. In addition to being approved for loans faster, lenders who might otherwise require security deposits may waive them if they have good reason to believe they’ll get their money back when they loan to you.
Also, keep in mind that some banks and other financing institutions might offer lower interest rates if you present a strong credit history; if 5% sounds better than 7%, then keeping your score up could save thousands in interest payments over time. Credit scores change over time—if yours is below 700, check out our guide on how to improve your credit score by 100 points in less than six months! If you're thinking about starting a business, but don't know where to start or what you need to do first, we've got you covered.
Here's everything entrepreneurs need to know about getting started. 1) Research Everything: The idea behind the research is simple: Spend hours learning about everything related to your business before spending one dime on it. You'll learn about industry trends, competitive advantages and disadvantages, regulations affecting how you do business...even how much certain items cost so that no matter what kind of revenue streams you come up with down the road (subscriptions? Products?
6) Own your home
Owning your home is an incredibly valuable financial goal since it gives you complete control over your housing costs and guarantees that you’ll always have some equity in your primary asset. Plus, buying when you’re young is easier than ever before—the homeownership rate among millennials (those born between 1981 and 1996) has risen to 40% from 32% between 2004 and 2014. If you’re getting ready to buy, here are five tips on how to purchase your first home.
And don't forget to factor maintenance into your budget! It's easy to underestimate how much time and money will go into fixing things around your house. The longer you own a place, the more maintenance expenses tend to add up. Keep track of all those expenses by setting up a spreadsheet or using one like Home Advisor's free tool. It will automatically track all sorts of information about your property, including major repairs and energy efficiency scores.
7) Build wealth through side hustles
Some people are earning extra income while they're still in college. Others, who have graduated and are working full-time jobs, find ways to make more money on their own time. Consider using websites like Upwork or Fiverr to market your services and earn some extra cash without leaving your job. If you have skills that businesses need—like SEO or marketing—you can also get paid for tasks through sites like TaskRabbit or Gigster. Or, use your strengths and skills to offer one-on-one tutoring in whatever subject you're good at (math, writing, etc.).
Whatever it is you do in addition to a regular job that makes money: Do more of it! Even if it doesn't bring in much money, every little bit helps. And don't forget about investing your savings. You never know what could happen tomorrow, so keep as much as possible safe from harm's way by keeping it invested somewhere safe and secure. You'll thank yourself later when you see how much interest has built up over time!
8) Use your credit cards responsibly
Credit cards can be your best friend or worst enemy. Keeping them in check is especially important when it comes to saving for retirement. The easiest way to rack up debt on your credit card is to make non-essential purchases, so if you're trying to save money, refrain from using it at all—and if you want something, save up and pay cash. But here's another tip: even if you pay off your balance every month, carrying a high balance (aka how much debt you're carrying) can decrease your credit score by making it seem like you're less able to handle credit responsibly. If that does happen, though, don't worry! There are simple steps you can take to increase your score again. Just avoid going into more debt and pay down what you owe as quickly as possible. Your future self will thank you later.
Don’t forget about compound interest. If you start investing early enough, compound interest will help supercharge your savings plan because any returns made now will continue to add onto returns in the future - which means more growth and wealth over time! This may not be applicable right now since most people don’t have any investments but I wanted to point out that there is nothing wrong with getting started earlier rather than later!
9) Stay healthy and well-insured
Besides being expensive, medical bills can wreak havoc on your life. If you have any major health issues or chronic conditions, do what you can to keep them in check—and be sure to buy insurance if your policy lapses. Health and wellness are among America’s top financial concerns (right up there with retirement), according to an April 2018 survey by GoBankingRates. 79 percent of respondents named their health as a key financial goal. When it comes to protecting yourself financially, prevention is key. Start with these steps
- Stay physically active
- Eat healthy
- Don't smoke
- Manage stress
- Drink alcohol moderately
- Get enough sleep
- Avoid using drugs
- Maintain a healthy weight
- Be safe when exercising
- Have regular doctor visits.
10) Sleep on it!
A well-rested mind is an efficient one. Getting less than six hours each night impairs your ability to make decisions, lowers your IQ, and increases your feelings of stress. If you don’t get enough sleep, not only will you feel groggy, but you’ll be prone to making poor choices—bad investments, poor money management, or overeating—because your brain isn’t working as efficiently as it should. And to be on top of your game in college and beyond, it pays to take care of yourself by getting enough sleep each night. You’ll thank yourself later!
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