3 Steps to Financial Success for Recent College Grads

A simple strategy to create lasting financial independence

Photo by Jonathan Daniels on Unsplash

With the national unemployment rate dropping below 4% and many state and local rates falling even further than that, the employment outlook for college grads is the best it’s been in a generation.

According to the National Association of Colleges and Employers, engineering and computer science grads command the highest salaries with an average starting salary of over $66,000. However, even college graduates with liberal arts degrees like communications and social sciences should expect average salaries of more than $50,000.

On the flip side, the average college grad carries almost $40,000 in student loan debt with many graduate and professional students exceeding that number by $100k or more.

Nevertheless, a strong economy, high employment rates and competitive starting salaries will help many young college grads to take a major leap forward in their financial life.

25 years of observing high net worth clients has lead me to believe that, for many recent grads, there are 3 key steps to financial success.

Step 1: Look for a job with great company match. Despite what you may read and hear from others, a company retirement plan combined with an employer matching contribution will likely be one of the best investment opportunities that will ever come your way.

A successful, growing company that offers a 401(k) plus an employer match on your contribution can be the difference between achieving financial independence someday and struggling financially for the rest of your life.

Even if your budget is tight, find a way to contribute at least enough to your company plan to get the full benefit of your employer match. If their contribution is capped out at 4% of your salary, contribute at least 4% to your plan. If they match more, contribute more.

Do this regardless of the economic or market conditions. Do this no matter how tight your budget is. Do this even if you have a mountain of student loan and other debt. An employer-sponsored retirement plan may not guarantee your future financial success, but your odds of success without one are small.

Step 2: Commit to always saving at least 10% of your income – starting now. Consistently saving a percentage of your income over a long-period of time is one of the keys to accumulating wealth. Ideally, you should try to save 15% to 20% of your gross income before taxes or other deductions.

In the book, The Millionaire Next Door, Authors Thomas Stanley and William Danko researched families that had a net worth of more than $1 million. What they found was that most families with a net worth greater than $1 million had consistently saved between 15% and 20% of their income for their entire careers.

In my experience, nearly all my clients who have $1 million or more investment assets committed to a long-term savings program early in their careers and they stayed with it through thick and thin.

One of the easiest ways to do save money is through payroll deduction into your retirement plan at work. Even if your employer doesn’t offer a matching contribution, find a way to add 10% or more to your workplace retirement plan.

If your employer doesn’t offer a retirement plan, start a Roth IRA. Oh, and find another employer.

Step 3: Become debt-free as soon as possible. It’s OK and perhaps necessary to have some debt from time to time. Most students borrow money to pay for college. Some student loan debt isn’t a big deal, if you pay it off quickly.

The faster you can pay off debt the less money you will pay in interest and the more you will be able to save and invest for yourself.

If you have student loan debt, create an aggressive strategy to pay off your loans within 10 years or less; sooner if possible. That may mean making extra payments or participating in a student loan forgiveness program.

Joy Sorenson Navarre, founder of Navigatestudentloans.com can help you determine if such programs are right for you. Although her niche focuses on physicians, her firm can advise anyone with high student loan balances looking to lower their student loan payments or have their loans forgiven entirely.

You can schedule a call to get more information by clicking here.

You’ve been living the life of a poor college student for the past four years. Now suddenly, you’ve got a world of opportunity before you. Make the most of it by getting a job with a good company match, saving up to 20% of your income, and paying off your student loans as soon as possible.

Follow these three simple steps and someday you may be the millionaire next door.

“Swedish Death Cleaning” For Your Estate Plan

How the Swedish concept of "Dostadning" can help you get your affairs in order

Photo credit: Tom Skarbek, Unsplash.com

Cory Wessman is an estate planning attorney with the law firm, Erickson & Wessman. His office is in the Broadway Place West building in NE Minneapolis where I work.

He sent the following letter to his clients and I thought it would make a great guest post.

You can find out more about Cory and his services at his website, www.cericksonlaw.com.

Below, he offers great advice for “spring cleaning” your estate plan. If you need help creating and updating your “Master List of Accounts”, let me know. We have this information for all our financial planning clients and are happy to provide it to you in a secure way.

How Much Money Could You Lose In The Next Market Crash?

Most market forecasters predict “increased volatility, but positive returns” for stocks in 2018. However, the truth is that no one knows when the next major market selloff will occur, how long it will last or how steep it will be.

If the last few weeks have reminded us of anything, it’s that markets can change suddenly and go down quickly.

During the crash of 2007/2008, markets saw gut wrenching declines of more than 50%. Since then the S&P, Dow Jones Industrial Average and other major markets have rallied into one of the longest running bull markets of all time. But this too shall end.

If the next major market decline were to happen tomorrow, how much money could you lose in the next market crash?

To find out, read on… 

March Madness: It’s What Happens When You Find Out How Much College Tuition Really Costs

3 suggestions for parents facing crazy expensive tuition bills

Photo by chelsea ferenando on Unsplash

It’s that time of year…. March Madness! Time to get your game on sports fans!

At least, that’s what I have heard.

Truth is, I know next to nothing about men’s college basketball. In fact, I probably couldn’t even name four of the 68 men’s college basketball teams participating in the tournament, much less try to predict which teams will make the Final Four.

Apparently, however, it’s a thing.

According to the American Gaming Association, over 40 million Americans will test their sanity as they fill out their brackets and place their bets as to who will win the coveted NCAA men’s basketball tournament.  Over $10 billion in bets will be placed on this year’s event before the month is over. Odds of completing a perfect bracket (whatever that means): 1 in 9.2 quintillion. Good luck.

Something I do know. College tuition is insanely expensive.

If you have kids going to college next fall, the real madness begins when you get your college admissions letters and schools tell you how much you will need to fork over to attend their school.