Tips for Class of 2022: What New Grads Need to Know About Money and Jobs – CNBC | Vette Leader

Lilly Faust

Courtesy: Lilly Faust

When Lilly Faust graduated from college in December, she was lucky enough to get a job right away.

She also managed to move out alone with a roommate to an apartment in Montclair, New Jersey.

“I’m very proud of myself,” said Faust, 22, who is now a first grade teacher in New Jersey.

“I was the broke college kid just trying to make ends meet,” she added. “It feels really good to have my own money and to be able to support myself.”

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She made it possible with careful planning.

Faust worked part-time jobs while attending Stockton College in New Jersey and started her own business selling clothes online. This enabled her to save up for a down payment on an apartment. She’s now saving $1,000 per paycheck for student loans and another $1,000 per pay period to live on if she doesn’t get a salary this summer.

The transition from school to the adult world of work and money is not necessarily easy. But getting started with the right financial basis can lead you to success later.

save money

Many young adults think of get-rich-quick investing as a get-rich-quick idea, said certified financial planner Cathy Curtis, founder and CEO of Curtis Financial Planning in Oakland, Calif.

“A lot of young people have a distorted view of how to invest in the markets,” she said. “They invest in IPOs, companies that they think are cool.”

In reality, you should invest in index funds and watch your money slowly grow, she said.

Therefore, if your employer offers one, you should open a 401(k) and contribute at least as much as the company matches, she said. If this is not available, you should open a Roth individual retirement account.

If you wait too long to start, you’re missing out on the compound interest that can really make your money grow, said CFP Tom Henske, managing partner at The Affluent Insurance Advisor in New York.

According to analysis by wealth manager Vanguard, someone who by age 25 saves $10,000 a year in a 401(k) with a matching contribution and stops by age 40 has more than $1 million in retirement to have.

Someone starting at age 35 and saving $10,000 a year for the next 30 years will have $838,019 in retirement, according to Vanguard, assuming a hypothetical annual return of 6% and not accounting for inflation .

It’s also important to set aside money for emergencies separate from your retirement savings.

Creating a budget

A budget essentially keeps track of what money is coming in, such as B. Your paycheck and what is spent to pay bills.

When setting your budget, treat your savings like a bill, Henske advised.

“When you start doing things like going out, eating out and social stuff, you’re saving exactly what’s left over,” he said. “Do not do that.”

“Start with what you save and stack everything else around it.”

construction loan

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If you don’t have a checking account, open one, Curtis said. The same goes for a credit card, as long as you use it responsibly and don’t rack up debt.

“Building credit is the foundation of your financial life as you grow up,” she said. “The sooner you start doing this, the better.”

Your credit score affects everything from your ability to get a loan or rent a home to the amount of interest you pay on loans.

If a credit card isn’t a good option right now, consider building credit with a secured card that’s backed by money you’re putting into an account.

Find a job

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Although inflation is high and there are some concerns about a looming recession, college graduates in general are finding a positive job market right now, reports show.

According to the social media giant, entry-level job postings on LinkedIn increased nearly 17% in the first three months of 2022 compared to the same period last year. According to the National Association of Colleges and Employers, employers plan to hire 26.6% more new graduates from the Class of 2022 than from the Class of 2021.

All of this, coupled with the tight labor market and the so-called major layoffs, give the graduates confidence. According to job portal Monster, four out of five college graduates believe they will receive a job offer that matches their career goals.

“Job seekers are in the driver’s seat,” said Monster career coach Vicki Salemi. “You have the greater advantage [over employers] in the career entry market.”

Her advice: Find the right fit, which means consider benefits in addition to salary, ask questions during the application process, network with family, friends and professors, and negotiate every offer you receive.

Understand your benefits

Once you get a job, make sure you understand your job benefits, especially the financial ones, like retirement plans, insurance, and health plans.

Make sure you get long-term disability insurance that covers you if you have to be off due to illness, Henske said.

When it comes to health insurance, young adults should opt for a high-deductible plan because they don’t use insurance as much in their 20s compared to later in life.

This is how you can open a health savings account that allows you to deposit money tax-free. That money also grows tax-free throughout your lifetime, and withdrawals aren’t taxed as long as they’re used for qualifying healthcare expenses.

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