Confluence Commentary

Advice for Young Professionals – Top 10 Financial Wellness Tips for Young Professionals & Upcoming Graduates

By: Zac Saunders, Wealth Manager 

1. As you consider your career and job opportunities – think about total compensation, not just salary!

• Assess the total compensation package (healthcare, 401k match, etc.) when reviewing job offers

2. Create and maintain a monthly budget.

• Setting up a budget is of utmost importance.
• Keep track of your spending and keep expenses down (Needs vs. Wants).

3. Start to build up your emergency savings.

• A good rule of thumb is to keep 4-6 months of living expenses in savings.

4. If available, start contributing to your work 401k plan and take advantage of the company match benefit.

• You should consider contributing at least the amount to obtain the maximum company contribution. This is free money!  For 2020, the maximum contribution that an employee can make to their 401k plan is $19,500.

5. Start an individual retirement account (Roth and Traditional IRAs).

• You can contribute to a Roth or Traditional IRA (depending on income limits) while also contributing to a work 401k.
• The total amount that a person can contribute to all traditional and Roth IRAs combined is $6,000 for 2020.

6. Pay down any debts and if you have student loans consider consolidating.

• Be disciplined and start paying your loan off as soon as you can.

7. Pay off credit cards on a monthly basis. A credit card can help you build credit provided you pay off in a timely manner.

• Don’t spend what you don’t have.

8. Start saving for your first home. We recommend saving 20% for a down payment.

• Avoid private mortgage insurance (PMI)!

9. It’s ok to buy a car, but don’t fall for the low monthly payment options that are spread out over 48 + months.

• Don’t live beyond your means.

10. Save and Invest Early. Time and compound interest should be your best friend!

• Case study A: Contributing $500 per month to your portfolio from age 32 to 65, growing at 9% average annual return, adds up to approximately, $1.1 million…not bad!
• Case study B: Contributing $500 per month to your portfolio from age 22 to 65, growing at 9% average annual return, adds up to approximately, $2.6 million…even better! Key takeaway: START EARLY!

Any opinions are those of Zac Saunders and not necessarily those of RJFS or Raymond James.  The case study examples are for illustrative purposes only.  Actual investor results will vary.