Focus on Finance


I’m going to graduate pretty soon, and I’m excited about heading off into the “real world.” One thing I’m worried about, though, is money. I’ve never really been great with money, and I don’t feel like I know much beyond the basics of budgeting and saving. I know that I’m supposed to start saving for retirement as soon as possible, but I don’t know when that will be, or how important it really is to rush into that. I don’t know what to do with my money, basically (besides spend it), so I’m hoping that the experts can give me a crash course in personal finance.

We can, and we will!

Personal finance is extremely important. Unfortunately, it’s also an area that many of us are not too good with. Most Americans couldn’t cover a surprise $500 expense without taking out a loan, and that’s not good. You don’t have to think that there’s an inherent virtue in having money to understand that saving is good: when so many Americans cite money as a source of stress, it’s clear that having a good financial plan is a key to living a relaxed and happy life.

So what does that mean? Well, for starters, it means spending less than you earn. That may sound obvious, but it’s can be tough for recent graduates to balance their many competing urges as young professionals. Don’t feel pressured to go out as often as you did in college--pricey bars are going to set you back financially in a way that dorm-room get-togethers did not. And don’t be too tempted by more “grown-up” expenditures, either: while it’s nice to replace your futon with a real bed or invest in a decent TV, you need to remember that the lifestyle your parents and their friends have is one they’ve built up over many years. Recent college graduates need to acquire that lifestyle slowly, while saving some money for retirement.

Once you have a bit saved, you’ll want to put it in a savings account, say bankers in Watertown, New York. Savings accounts have higher interest rates than checking accounts. Interest is the key to building wealth. It works so well because of compound interest, a financial concept that refers to the idea of reinvested interest at work. Money saved now can snowball into much larger sums, which each interest calculation made on a larger and larger principle. Money saved later has less time to reap the benefits of compound interest, which is why a dollar saved in your 20s is worth $10 saved in your 50s.

The next step is to invest. Stocks and bonds can seem confusing, but a good financial advisor will set you straight, say the financiers at Zhang Financial. You just need a balanced portfolio that takes advantage of tax shelters like 401(k)s and IRAs--tax-advantaged accounts that are designed to help you keep money safe for retirement.

And, really, that’s all there is to the basics: you need to budget, save money, and put it in (safe) places where interest rates are high. You’re lucky to be in a position, as a college graduate, to build real wealth and ensure a happy financial future. Stick to your goals, and you’ll be just fine.

“At the end of the day, if you’re wasting your time by not investing in yourself, you’re going to waste away--and that would be the greatest waste of all.” -- Richie Norton

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