Graduation can be a terrifying time for students, stepping out into the real world and trying to figure out how to make ends meet. Three 50-something-year-old professionals sat down and shared what they wished they had known in their 20s about their finances, and what advice they have for new graduates.
Susan Stuef, 54, is a retired teacher and high school athletic coach for 25 years, made sure she had benefits and a safety net for the future when she began her career.
“I knew I needed a white collar, college degreed job to make the money that I needed to live comfortably and provide for my family,” said Stuef. “Those jobs also had benefits, like health insurance, and my teaching job also provided retirement. Unfortunately, current teachers starting out do not get the same level of benefits or pay.”
Robert Turner, age 56, is a real estate development manager for Dunkin’ Brands International. Turner has been in the commercial real estate and development industry for 30 years.
“I never really spent much time thinking about it. At the age when you’re just beginning your career, you’re most likely at the lowest point in salary earnings. You’re just trying to get by paycheck-to-paycheck and saving and investing your limited income is not a high priority,” said Turner. “As soon as I was able to begin to earn more income, I became much more comfortable in setting aside monthly income into 401k’s and other investments.
“At this point in my career, I’m setting aside the maximum amount I can as can afford to so without limiting my day to day quality of life.”
Lisa McClellan, age 51, is a public school teacher, having just completed her 28th year of teaching. McClellan hit the ground running after graduation.
“When I graduated college I had no idea about money other than it paid for my car and insurance back then. I had no idea about what retirement funds meant at all, and now I realize retirement funds mean everything,” said McClellan.
It can be difficult for young adults to figure out how to handle and plan their finances if they have never had to before.
“My husband and I researched how to set ourselves up for everyday living and for the future. We received good advice from our teachers’ union. Make sure you are well insured during your working years, plan for kid’s college, retirement, and for larger purchases. Above all, live within your means,” said Stuef. “We did do some investing and saving with annuities. All were very conservative and we did well even in economic downturns.”
Turner wishes he had met with a financial planner earlier in his career.
“I felt I was better prepared than most and being married to a Certified Public Accountant certainly didn’t hurt. At the same time, I never did meet with a financial planner and often wonder now if that would’ve made a difference with creating a higher yield in retirement savings to this point in my life,” said Turner.
McClellan wishes she had guidance when she was first making financial decisions in her career.
“I was not prepared to understand finances when I graduated college at the age of 22 and had no idea how that lack of knowledge back then would hurt me today,” said McClellan. “I was raised in a hard working family but they were non-educated, and so I had no idea that you could prepare for retirement at the beginning of my career.
“I did not understand the questions asked of me at my contract signing and made decisions back then that I wish I would not have. I did not sign into the correct retirement plan. I now realize that I should have had my money work for me and that saving on your own would be very difficult.”
There are, however, several things that young adults can start doing now in order to be better prepared in the future.
“When choosing a career, make sure to understand what it entails and what is required. Also, [knowing] what the income will be is huge. Once you begin working, keep a budget and monitor it closely. Save an amount every month, as if that is a required ‘bill,’” said Stuef. “Weigh every big purchase carefully. Pay bills before they are due. Keep your credit score high. Make sure you’re properly insured in all areas, and save for retirement (annuities).”
McClellan encourages young adults to ask questions and to seek guidance and support from older professionals.
“I feel like young people should ask a lot of questions of people who have been experienced in life. Professional parents have a different outlook on a future than non-professional parents. I would encourage the younger generation to ask questions and do research to ensure a better financial future,” said McClellan. “Be smart and live at home as long as possible and learn how to tackle independence slowly.
“It is not so wonderful to grow up and become independent quickly, but if done correctly it can be very rewarding. Enjoy your youth and spend wisely. Material things are wonderful but not mandatory to live a happy life.”
Turner advises that graduates begin budgeting out savings from their income now so that it can build for the future.
“I encourage grads to set aside money every month. Even a small amount over time can appreciate into a much larger yield. I also feel that knowing more about real estate and mortgage financing and utilizing the knowledge now, would have paid off tremendously much later in life,” said Turner. “I feel strongly that a vast amount of people of all ages, and not just those in their 20’s lack the discipline to save and invest properly.
“The only way to do that is to seek financial counseling advice from a planner. If someone does show the willingness to discuss situations with a financial planner, finding a competent and trustworthy planner can be a difficult task. You have to rely heavily on recommendations from those you trust and do your due diligence in investigating the person and the company.”
Turner also recommends selecting a career field with stability and to prepare for financial emergencies before they happen.
“If they have a steady job in their chosen career with a steady income, they should absolutely begin living financially independent. That’s the beginning of living your life. It’s ok to rely on living with friends and family until you begin to accrue some savings to invest in your first apartment or home,” said Turner. “The only other item I would suggest is to make sure that you have on-hand cash available through savings or an easily accessible account to use in case of emergencies.
“An emergency can be anything from health related items to losing your job to household repairs. You never know when these things happen and should always have enough cash on hand to get you through these times. In the event of a job loss, which happens to most people at one point in their careers, you need to have enough cash on hand to cover all of your living expenses for the amount of time it’s going to take for you to get a new job.
“If you think it will take 6 months to find a new job, you need to have 6 months’ worth of living expenses readily available to you in cash to cover.”
For students graduating and preparing for the next step in their careers, sitting down with an older professional and mentor can save a lot of stress and confusion, all you need to is ask.