Another graduation season has passed. Thousands of young 20-somethings – the millennial generation – are entering the workforce, excited about their new freedom, their new journey and their new paycheck. Along with the excitement of new cash, however, comes new responsibilities and new decisions about how to spend it.
I recently read the article 6 Things Recent Grads Should Spend Money On by Samantha Sharf, and it got me thinking. Sharf reports that the spending habits of today’s grads are impacted by the recession they experienced as they were coming of age. She cites Kristen Euretig, a Brooklyn-based financial planner specializing in 20- and 30-something clients, who says this generation’s conservative spending tendencies “resemble what you would expect to see from a Depression-era client.”
In other words, these are some pretty serious-minded, level-headed young people. Sharf advises them to spend money on six important things as they embark on their adult lives. Some of the items, such as building emergency and retirement funds, are predictable. All are valid and practical. To them I would add four more that young people might not typically think of.
1. Invest in networking. Investing time and membership dues in professional and civic organizations can help build a strong network of relationships that pay off for a lifetime. Many arts and professional groups actively cultivate their next generation of members. Some, such as country clubs, even offer junior memberships at special rates. Our advice to grads: get involved with groups whose focus aligns with your personal or professional goals. Join, go, do, and stay in touch with the people you meet. Learn how to communicate in high-touch, old fashioned ways such as through hand-written notes. These are things that will make you stand out.
2. Think about and save for your first home or other large “ROI-potential” purchase. We know; the thought of owning a home seems to belong on the “someday” list. But it’s never too early to start saving for your first home. The earlier you can buy a home – even a small one – the sooner in life you can start building equity and taking advantage of the mortgage interest deduction on your taxes.
3. Put money aside for car maintenance. Unless you depend on mass-transit, your car is as much an “appendage” as your cell phone. Spend the money to keep it healthy with all needed maintenance. Don’t neglect the interior or body, either. You’ll appreciate the value it retains when it’s time to trade it in.
4. Remember: it’s a marathon, not a sprint. This tip isn’t as much about how to spend money; it’s about keeping money in perspective. Don’t let the expenses of adult life cause you to focus only on the job with the biggest salary. What you really want is the career with the deepest fulfillment. You can build a low starting salary into a remunerative career, especially if it involves doing something you enjoy. Make sure you finish your career marathon with a smile on your face and not in a cloud of burnout.
At PARTNERSINWEALTH, we relieve the burden of your finances by serving as a single point of contact for all of your financial matters and by freeing up your time to focus on work, passions, dreams and each other. For more information on how we can accelerate the growth of your net worth – and your peace of mind – please contact Jim Waters, CFP®, at PARTNERSINWEALTH, 713.964.4028 or firstname.lastname@example.org.