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New graduates are entering into one of the toughest job markets in recent history, with unemployment rates for recent grads hitting 5.8% compared to just 4% for all workers. So, it’s a crucial time for young people to make smart financial moves. I want to bring in Deena Healy, who is the Amerprise Financial Vice President of Financial Planning and Advice. Great to have you here in studio with us. You have four pillars of advice for new graduates. Study your benefits, establish a strong credit history, develop a budget, and take advantage of uncertainty. So, let’s start with benefits. Why is it important to study those benefits?
00:00:52 Deena Healy
It’s an exciting time for new graduates into the workforce to think about what benefits they have. It’s a great time to take a look what at what’s offered, whether they have a 401k. This may be the first time that they’ve had access to a 401k. So, making sure that they can max out at least the employer match, but also looking at health insurance. This is probably the first time they’ve had to pay for health insurance. And then, what are the other benefits available to, to new grads into the workforce and taking advantage of what’s offered to them.
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So, why is it also important to establish a credit history, and, I mean, this is really going to set folks up for life basically.
00:01:49 Deena Healy
It absolutely will. It will set the foundation. You think about your credit history and whether you’re renting an apartment for the first time, whether you’re buying a car, you’re buying a house, all of those things will look at your credit history to determine whether you’re a worthy risk. And so, if new grads, new folks into the workforce can manage to live within their means, making sure that they understand what their expenses are, and then, if they can start to think about, can they get a credit card to start to establish that credit history, making sure that they don’t overcharge on that card and pay off the, the balances every month, that’ll put them in a really solid foundation for future financial decisions that they may make.
00:02:53 null
Yeah, that’s great advice. Also, here, we know that you’ve got to develop a good budget, even if your funds are limited. So, how, how can you go about really setting the foundation there?
00:03:07 Deena Healy
Yeah, I think, first it’s important to understand what you have to work, work with. What’s your income? What are your expenses? I think the areas where you can run amok a little bit are eating out and spending a lot of money on going to restaurants or bars, and just focusing in on how much can you afford on a monthly basis for some of those extras, and trying to live within your means. That’ll be super helpful.
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Now, young investors, how can they take advantage of uncertainty? I mean, there’s been plenty of that permeating and, and really rattling around over the course of 2020 to 2025 in the first half of this year.
00:04:10 Deena Healy
Yeah. Absolutely. If I were a new graduate, while obviously the job, job market may be challenging, the volatility and the market uncertainty can play in their favor. They have a long time to invest. And so, when I think about saving into a 401k or saving into, uh, into the stock market, you’re actually having the opportunity to dollar cost average. That means buying in over time, and if the market is down, you’re buying things on sale essentially. So, if you were to go to Target and buy laundry detergent, and it’s on sale two for one, you’re going to buy two because it’s cheaper, right? The same thing is happening with the stock market. If you’re new into the market, you have plenty of time. This is, to me, exciting for you because you’re buying in at potentially lower prices that long term, you’ll see that long term appreciation.
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Going to ask you a bonus one here, uh, especially as we have even more of a mindset among younger folks, new graduates, who are looking across the gig economy, the influencer economy, and looking at the job market as well, and trying to say, okay, if I can’t get into the job market right now, how do I start my own business and generate my own income? What is the best way that they can set a foundation for generating different streams of income as well over their careers?
00:06:01 Deena Healy
I think that’s a great question, and certainly, owning a business is a way to generate wealth. What I would say is making sure you have good personal financial fundamentals, having a savings account, building up a cash reserve, understanding your expenses, understanding tax implications. All of those things will help you if you’re thinking about starting a business, making sure you have some sort of foundation to protect the downside in the event that things don’t go as planned.
00:06:43 null
Great advice, Deena. Thanks so much for taking the time here with us in the studio.
00:06:48 Deena Healy
Thank you. Appreciate it.
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