Posted August 16, 2021 by Mark Perna
Making enough money is just the beginning—then you have to manage it. Everyone, from recent college graduates to those well established in their careers, can reap the benefits of advancing their personal financial literacy. Mark’s article, “5 Quick-Hit Personal Finance Tips To Help You Invest In Yourself,” published at Forbes.com on July 13, 2021.
Everyone knows that money can be hard. Making enough of it is just the beginning—then you have to manage it. Millennials have their share of money regrets, including credit card debt, lack of financial planning and, of course, the big one: college debt.
Now, many recent college graduates are also carrying significant educational debt into the next chapter of their lives. The national average for college debt sits around $37,000 per borrower. Respondents to a recent CollegeFinance survey had graduated with an average of $22,000 in student loan debt, have $14K left to pay and expect to complete repayment within six to seven years.
College debt affects more than just your financial outlook. Overall, 27% of the CollegeFinance respondents say their student loans made career changes difficult, including 36% of those owing $51,000 or more. Three in 10 say the same for taking a career risk, including 44% of those with $51,000 or more in outstanding student loan debt.
“Managing significant student loans brings additional levels of stress,” says Ryan McPherson, Director of Coaching at SmartPath. “This can be amplified if the recent graduate’s income is not commensurate with her/his required debt payments. Higher debt burdens may mean that graduates are taking longer to save up emergency funds and home down payments.”
Of course, it’s not just young people who could benefit from a little extra awareness in the area of personal finance. “As a whole, Americans could use additional money management education for different life events, e.g., handling student loans, buying a home, financially preparing for kids, paying taxes and planning for retirement,” says McPherson.
“Employers have the opportunity to help with this problem by incorporating financial wellness into their HR benefits packages to help educate their employees on money management skills,” he says. But workers shouldn’t wait for their employer to take the first steps toward better financial literacy. McPherson offers five quick-hit tips that college graduates—and the rest of us—can implement immediately to create a better financial future:
When it comes to personal finance, knowledge is power. “Start by reading as much as you can,” says McPherson, who recommends blogs like NerdWallet, Financial Samurai, Mr. Money Mustache, The Penny Hoarder and Millennial Money. “These cover the basics like creating a budget and smart ways to pay down credit card debt, and go all the way to advanced topics like investing in rental real estate.”
McPherson also has some book recommendations, including The Psychology of Money, Fuel: The Most Important Number in Your Financial Life (authored by SmartPath’s CEO/Co-Founder) and The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money.
“Some topics in these resources will interest you and others will be dreadfully boring,” says McPherson. “That’s ok, so long as you understand the basics. Dive deeper into what strikes you.”
SmartPath also offers a free online resource called the Money Moves Quiz where anyone can answer 15 questions about their current finances and receive an actionable plan tailored to their individual situation.
The pandemic has created extra challenges for younger workers who not only experienced higher unemployment rates, but also missed out on in-office mentoring, networking and training opportunities during the lockdowns. “While this might not immediately appear to be a financial challenge, it could impact career growth and opportunities for some,” McPherson notes.
Despite these challenges, CollegeFinance found that roughly 6 in 10 people continued making payments during the interest freeze period, among whom 86% were able to make progress on paying down their loans.
People will continue to experience financial stress even once the pandemic ends. “It’s a scary time for recent grads to be entering the ‘real world,’ so it’s more important than ever that employers provide financial wellness resources and support past open enrollment,” says McPherson. This can benefit both employer and employed, as surveys indicate that more employees would stay with their employer longer if they offered financial wellness benefits.
Money can be hard, but there are many tools and knowledge sources to make it just a little easier. Whatever point you’re at in your career, it always pays to invest time in your finances—and ultimately, in yourself.
