Financial Fridays
Financial Information for Recent Graduates
By Bill Jenkins - Countybank
Apr. 24, 2009 at 10:17 AM
Today on the show we responded to a question from a viewer who asked about what to do now that they’re out of college and entering the workforce. They were specifically interested in resources, like web sites and books, etc. So here’s the list we covered on the air today:
What to do:
1. Get Job. This is self explanatory, but these are tough times for recent college grads. I recently saw a news report saying only 59% were finding full employment after graduation.
2. Set aside 6 months income in a ready savings account for emergencies (like losing a job, car accidents, etc.). Do this a little at a time. Automatic transfers to a savings account each payday is the easiest way to build savings.
3. Reduce debt. Use the grace period on student loans to try to whittle away at credit card balances or build your emergency fund.
4. Contribute to your employer’s 401(k). You’ll want the tax reduction and remember, even if you onlly put away a few bucks each pay period, every dollar you save before age 30 will be like putting aside five after age 50! Hard to beat the return on that investment.
5. Begin saving for home down payment. After you’ve set up your emergency fund and gotten used to putting at least a couple of percent of your pay into a retirement account, open a separate account to put money away for a down payment. Even with an FHA loan, you’ll need at least 3.5 % down and money for closing costs, and a reasonably good credit score. In conventional financing, you’ll need at least 10% and a good credit score although the best rates are for those with 20% to put down. The days of no money down mortgages are pretty much over, but on the flip side, rates are really good and should not rise steeply for a while, barring any sudden burst of inflation
As far as resources, check out these books and web sites.
Web sites:
Mint.com
Wesabe.com
Buxfer.com
These are sites that allow you to enter your log in information to all of your accounts and the site will aggregate all of your expenses, track your savings, checking, investments and assets so you can see how you pay down debt, increase your net worth, and generally track your progress toward your goals. Great if you’re comfortable with electronic banking and billing on all of your accounts.
For books, we found these four:
The Under 40 Financial Planning Guide: From Graduation to Your First House by Cornelius P. McCarthy
Get a Financial Life: Personal Finance in Your 20’s and 30’s by Beth Kobliner
Rich Dad, Poor Dad by Robert Kiyosaki
The Millionaire Next Door by Thomas J. Stanley and William D. Danko
All of these make a great foundation. And of course, here’s the shameless but useful plug: you should start with a Kasasa Cash checking account at Countybank so that you can earn 4.75% APY* on your checking account balance and never pay for ATM usage anywhere in the country!
Please send your questions and comments!
Here’s all the disclosure language the government makes us publish whenever we mention a rate:
Annual Percentage Yield. APY on $.01 - $25,000 = 4.75% when monthly qualifiers are met. APY on balances from $25,000 and up = 1.01% when monthly qualifiers are met. Foreign ATM fees (including fees charged by Countybank for use of non-Countybank ATMs and any surcharges from ATM owner) are refunded at the end of each qualification cycle in which the four qualifiers have been met. To qualify for Kasasa Cash bonus rates, you must: 1. Make 10 debit card point of sale transactions per qualification cycle, 2. Receive your monthly statement electronically, 3. Set up one direct deposit or one auto debit monthly, 4. Access Online Banking at least once a month. In any month in which the four qualifiers are not met, this account pays the base rate of .02% APY. “Qualification cycle” means a period beginning one day prior to the first day of the current statement cycle through one day prior to the close of the current statement cycle. Minimum deposit to open Kasasa Cash account is $100. Rates are current as of 3/23/09 and are subject to change. Fees may reduce earnings. Member FDIC.
