Get started on the right financial path with these real-world tips.Like what you hear? Help us out by writing a review at iTunes. Questions go to money@qdnow.com. Thank you!
Money Girl
125 MG Five Tips for New Graduates
Building a portfolio with Fidelity Basket Portfolios is kind of like making a sandwich. It's as simple as picking your stocks and ETFs, sort of like your meats and other topics, and managing it as one big, juicy investment. That's pretty good. Learn more at Fidelity.com/baskets. Investing involves risks including risk of loss, Fidelity Brokers Services LLC, Member NYSC SIPC. My dad works in B2B marketing. He came by my school for career day and said he was a big row as man. Then he told everyone how much he loved calculating his return on ad spend. My friends still laughing at me to this day. Not everyone gets B2B. But with LinkedIn, you'll be able to reach people who do. Get a $100 credit on your next ad campaign. Go to linkedin.com/results to claim your credit. That's linkedin.com/results. Terms and conditions apply. Linkedin, the place to be, to be. Hello and welcome to Money Girl's Quick and Dirty Tips for a richer life. I'm Laura Adams. This episode is for new graduates or anyone who needs some real-world financial tips. Do you ever reflect back to an earlier time in your life and think, "I wish I knew then what I know now?" One of the reasons I love doing this podcast and teaching people about personal finances is to help them get started on the right financial path as early as possible. Are there some lessons I wish I had learned sooner rather than later when it comes to personal finances? You bet. I'll share five tips that can help anyone get a leg up on their financial future. The most basic and important rule for personal finances is to be prepared for the unknown. And you know there's plenty of that in today's turbulent economy. So, no matter how much money you start earning, tip number one is to quickly build an emergency fund. Think of an emergency fund as your investment in yourself. It's how you'll stay calm and cool in the face of a potential crisis. Like a broken-down car, an unexpected medical bill, or a job lay off, for example. Once you start building a cash reserve, be disciplined with it. Never take money out for anything other than real. Let me repeat real emergencies. Consider saving anywhere from five to ten percent of your income for your emergency fund. You should keep it in a safe place, such as a savings account at an FDIC and short institution. I recommend that you save enough to cover a minimum of three to six months worth of living expenses. Some higher yield savings accounts and money market deposit accounts will require minimum balances. So, as you accumulate more money, you'll have more options to earn higher interest rates. For example, you may have heard of ING at INGDirect.com. Right now, they offer a money market account with a 1.5 percent annual interest for accounts with a $1 balance. But if you have $2,500 to put away, you can earn 1.75 percent at discoverbank.com. There are many more options for higher interest rates that you may find locally or nationally. Bankrate.com is a great resource to start your account search. Tip number two also has to do with saving, but this money will be for the long term. Yes, you guessed it. This tip is to save for retirement. That should be your next priority after you've accumulated a healthy emergency fund. You might be thinking, "Hey, I haven't even found a job yet. Why should I be worried about what'll happen 40 years from now?" The answer to that question really boils down to the power of compounding interest. The earlier you start saving, the less you'll need to save over time. That's because the magic of compounding allows you to earn interest on your interest, and that gives you a lot more bang for your buck. It's important to save in government-sponsored retirement accounts whenever possible, because they help to reduce your tax liability. Just about anyone who has taxable income can open up an individual retirement arrangement or IRA. And if you're lucky enough to be able to participate in a workplace savings plan, such as a 401(k) or 403(b), never, ever pass it up. Participation is especially important if the employer offers a savings match, because that's free money, so you've got nothing to lose and a cushy retirement to gain. For much more on all types of retirement accounts and how to pick your investments, be sure to get my new audiobook, Money Girl's Guide to Retirement Planning. You can find it in the iTunes store or at audible.com. September is a great month for planning. We start thinking about the rest of the year, whether it's back to school, big year-end work projects, holiday plans or travel. Planning ahead is crucial in life, especially when it comes to what happens when you're gone. Getting life insurance may sound daunting, but policy genius makes the process a breeze. With policy genius, you can find insurance policies that start at just $292 a year for a million dollars of coverage. Some options offer same-day approval and avoid unnecessary medical exams. Policy genius's technology lets you compare quotes from America's top insurers in just a few clicks to find your lowest price. It's the country's leading online insurance marketplace. And if you ever need help or guidance, they have an expert license support team to answer your questions, handle all the paperwork, and advocate for you throughout the process. It's never too late to plan ahead. Go to policygenius.com or click the link in the description to get your free life insurance quotes and see how much you can save. That's policygenius.com. Introducing Wendy's new saucy nugs. The nugs you love covered in your favorite sauces. So no matter what flavor you're craving, Wendy's has you covered. Grab Wendy's new saucy nugs today. Open till midnight or later. 20s, hours may vary by location. My dad works in B2B marketing. He came by my school for career day and said he was a big row as man. Then he told everyone how much he loved calculating his return on ad spend. My friends still laughing at me to this day. Not everyone gets B2B. But with LinkedIn, you'll be able to reach people who do. Get $100 credit on your next ad campaign. Go to LinkedIn.com/results to claim your credit. That's LinkedIn.com/results. Terms and conditions apply. LinkedIn, the place to be, to be. Tip #3 comes straight from the heart because I could have done a much better job in this category early in my career. It's to snub wasteful spending. Many new graduates are so happy to be out of school and earning their own money that they go a little crazy. It's easy to start excessive and wasteful spending habits that give you fleeting joy but long-lasting debt. The new daily grind might leave you thinking I deserve this luxury apartment or that shiny new thing. At the risk of sounding like one of the preachy professors you just got away from, the saying a penny saved as a penny earned is true. In fact, the reality is that you can turn a single penny into many pennies if you invest it wisely. Tip #3 segues nicely into Tip #4, discard the credit card. That's because credit cards are usually the vehicle that makes wasteful spending so easy in the first place. If we always had to fork over cash to buy a little more of this or some of that, it's likely that we wouldn't buy it at all. Don't let your ability to get credit cards turn you into someone who abuses them. It's a good plan to have a credit card tucked away as part of a strategy to deal with emergencies. It can supplement your emergency fund if you find yourself in a serious pinch. And if you're extremely disciplined and always pay off credit card balances in full each and every month, they can be useful tools with great benefits. But getting cash back rewards and airline points will actually end up costing you much more in interest charges if you don't pay off your balance in full every month. Remember that if your bank account isn't flush enough to buy something with cash, check or a debit card, you can't afford to buy it with a credit card either. It might seem like loads of fun to go on a wild spending spree, but the debt hangover is too painful and lasts way too long. Another benefit to responsible credit card use is that it helps you accomplish tip number five, establish good credit. One of the challenges new grads and young people usually face is that they have little or no credit history. Many of your recurring bills can report your payment habits to credit bureaus. A late payment on your student loan or to a utility company can damage your credit score no matter how valid your excuse may be. Paying off a small credit card balance on time each month is a great way to slowly raise your credit score. It helps prove that you're a worthy credit risk for a loan such as a mortgage when you're ready for it. An impressive credit score also helps you get approved to rent a place to live, get lower insurance rates and qualify for employment at certain stringent companies. So be sure to stay on top of your bills and pay them on time. Now that you've made it through school, make your personal finances a top priority. How much you make isn't as important as how you manage your money on a day-to-day basis. It just comes down to sensible use of your precious financial resources. I'm glad you're listening. Send your comments and show topic suggestions to money at quickanddirtytips.com. Shoo-ching! That's all for now. Courtesy of Money Girl, your guide to our richer loan. [Music] Introducing Wendy's new saucy nugs. The nugs you love covered in your favorite sauces. So no matter what flavor you're craving, Wendy's has you covered. Grab Wendy's new saucy nugs today. Open till midnight or later. 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