Specialists provide cash recommendation faculty grads want to listen to however by no means get
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Do new college graduates need to work with a financial advisor?
Because of the number of financial topics they don’t understand, the answer is yes, according to consultants.
“The first thing [new grads] don’t understand that they qualify to work with a consultant, “said Katelyn Bombardiere, certified financial planner with Commas in Cincinnati.
Bombardiere helps young adults navigate the world of work by educating them on choosing employee benefits like 401 (k) plans – how to use them to save, choosing investment options within the company, and how to see if it’s a Roth -Option after tax there. It also explains different insurance options, the value of using health savings accounts, and how to negotiate salary and benefits.
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“They often don’t understand the concept of investing,” said Bombardiere. “I explain to them that there is a difference between long-term investing and gambling like day trading.”
CFP Stephanie Campos, owner of Campos Financial in Miami, shared other financial issues that new graduates fail to understand, including:
- The Advantage Of Refinancing Their Student Loans. “It’s a powerful tool, especially when it comes to shortening runtime,” said Campos. “It can save thousands over the life of the loan.”
- How much net salary you receive after deducting wage tax.
- Credit Card Usage – When To Avoid Using And When To Refinance Debt?
- The need for an emergency fund and when to use it.
- Total cost of home ownership – taking into account property taxes, homeowners insurance, etc.
How do you get these young adults to work with a financial planner?
“You have to be told by a trusted person in their life,” said Campos. “For example, some tech companies offer financial planning as an employee benefit.
“The emergence of the monthly subscription model [for financial advice] also helps. “
Bob Swift has created a new way to involve young adults in financial planning. He is the founder of TCI Wealth Advisors and the nonprofit 3rd Decade, a two-year financial education program, both headquartered in Tucson, Arizona. The program is primarily aimed at people between the ages of 18 and 35 who are regularly supervised by financial experts.
In the 3rd decade, Swift emphasizes a fundamental truth about the power of a long time horizon.
“There is an underlying assumption that you will not invest until you have paid off your debts, bought your furniture, etc., but the reality is [investing] should be a non-negotiable financial decision from the day you graduate, “he said.” Your first $ 100 should go to a Roth IRA [individual retirement account]before paying any bills. “
Swift added that he believed that most young adults lack structure (knowing where their money is going) and priorities (where they want it) when it comes to their finances.
New graduates also need help imagining possible future life events, said Jeff Tomaneng, a CFP and wealth advisor at Asset Management Resources in Hyannis, Massachusetts. To help them visualize their future selves, he sends them to websites that apply decades of aging to a person’s portrait.
“I ask them, ‘What do you want to happen before you get there?'” Said Tomaneng. “For example marriage, family, house, ideal job or entrepreneurship.
“It ties them up emotionally, which makes them more likely to pull it off,” he added. “It changes the way they think and empowers them to build new financial habits.”