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5 Things Every Graduate Should Do As They Enter the Workforce

It’s spring time again, and along with the May flowers come graduation ceremonies. As parents proudly look upon their children receiving their diplomas, they also wrestle with the unknown. How prepared are these graduates to enter the working world? Will they make good choices and be responsible? Will they have the same opportunity for success as previous generations? These questions will likely be answered by the decisions they make.

Young people have a tremendous opportunity to form good habits as they begin their careers. Establishing a sound financial foundation can lead to a more enjoyable life and financial peace of mind: but how to go about it? I recommend graduates implement the following five action items.

  1. Carefully reflect upon what you value most in life and align your financial resources to support these priorities.

Many people don’t consciously realize that much of the stress in their lives comes from not aligning their financial resources to support what they value the most and makes them truly happy. Instead of falling into the trap of American consumerism which sells the message one must buy things to be happy, why not take the time to define what makes you happy? Is it spending time with friends and family, or travel, or being financially independent at a certain age? Whatever the answer, properly structuring your finances and work life to support what you value will greatly contribute to your happiness.  

  1. Create a realistic budget, and base it on your income and what you value.

If one of your primary goals is to have an abundance of time to spend with friends and family, it doesn’t make sense to run up a lot of debt which will require you to work long hours to service it. Far too many Americans are essentially debt slaves. They amass substantial debt in pursuit of the “good life” only to find out it provides neither peace nor happiness. The responsible use of credit begins with a realistic budget reflecting your values and goals.

  1. Establish an emergency fund.

We’ve all heard this one a thousand times but it is true. Always maintain 3-6 months of your living expenses (obtained from your budget) in your bank account. Life always happens and your car will break down, the HVAC will go out, or that unexpected medical bill will come. Having an emergency fund to deal with these expenses will greatly reduce your stress and keep you from running up debt, which moves you away from what you value most. Establish this fund prior to beginning a longer-term retirement savings plan.

  1. Participate in a company sponsored retirement plan or, if not available, open an individual retirement account and fund with monthly contributions.

If you are fortunate to work for a company that offers a defined contribution retirement plan, sign-up to participate. Many of these plans offer employer matching contributions. If possible, fully contribute up to the point to which the company matches contributions. If you do not have a company sponsored retirement plan, establish an individual retirement account at a major custodian such as Fidelity or Schwab, and setup automatic monthly contributions from your bank account to your IRA account. This form of forced or automatic saving will serve you well.  

  1. Commit to ongoing professional skill development and maintain and expand your personal and professional network.

 In today’s ever changing world, young people will likely change jobs, if not careers, at least 3 or 4 times. It is extremely important to not only nurture your existing network but to continually build it out through involvement in the community, charities, or professional associations. More opportunities will be available to those with a robust network. And keep your skills current by attending professional or trade conferences, continuing professional education seminars, and constant reading. The learning hasn’t ended, it’s only beginning.