by Melissa Brock | Jul 18, 2024 | College Money Tips |
Achieving financial independence is a goal many aspire to, yet few fully understand its profound impact on life quality and future security. Financial independence means having sufficient income to cover living expenses without needing to work actively.
For parents, particularly those with high school students, starting to invest early can be a game-changer.
Early investments not only pave the way for a secure financial future but also set a strong example for children, teaching them the importance of financial planning and responsibility.
With the rising costs of higher education and living expenses, parents who invest early can ensure they are better prepared to support their children’s aspirations and needs. Learn the best way to save money for college below — make that multiple ways!
Going for Financial Independence
Financial independence refers to the state where an individual or family has enough wealth to live on without having to work indefinitely. This wealth typically comes from savings, investments, and passive income sources that generate consistent revenue.
The significance of financial independence lies in the freedom it offers — the ability to make life choices without being constrained by financial limitations. This can mean retiring early, pursuing personal passions, or simply enjoying peace of mind knowing that future needs are covered.
The long-term benefits of achieving financial independence are substantial. It provides a safety net in times of economic uncertainty, reduces stress related to financial instability, and allows for better planning of life events, such as children’s education and family emergencies.
For parents, achieving financial independence is particularly crucial as it enables them to support their children through critical phases of their lives, including college and early adulthood.
Why Start Investing Early?
Starting to invest early has numerous advantages, the most significant of which is the power of compound interest. Compound interest means earning interest on both the initial principal and the accumulated interest from previous periods.
Over time, this leads to exponential growth of investments. For example, a small investment made when your children are young can grow significantly by the time they reach college age, thanks to the compounding effect.
Early investments also contribute to financial stability for the family. They create a financial cushion that can be used for various purposes, such as covering unexpected expenses, funding higher education, or even supporting a comfortable retirement.
By investing early, parents can mitigate the impact of inflation and ensure that their savings grow in real terms, maintaining their purchasing power over time.
Early investments help in securing the future education costs of high school students. With college tuition fees increasing steadily, having a robust investment plan can make a substantial difference.
Parents who start investing early can accumulate enough funds to support their children’s educational goals without resorting to loans or compromising their financial stability.
Setting Investment Goals
Setting clear, achievable investment goals is a fundamental step in building a successful investment strategy. Begin by identifying your financial objectives and determining the timeframe for each goal.
You might aim to save for your child’s college education in ten years, or you might want to build a retirement fund over the next 20 years. Specificity is key – instead of setting a vague goal like “save for college,” determine the exact amount you need to save and the timeline you have to achieve it.
Aligning investment goals with family needs and future plans is crucial. Consider your family’s financial situation, lifestyle, and future aspirations.
This includes evaluating the potential costs of education, retirement, emergencies, and significant life events such as weddings or family vacations.
By aligning your investment strategy with these needs, you can ensure that your financial planning supports both short-term requirements and long-term aspirations.
Investment Options for Parents
Parents have various investment options to consider, each with its own benefits and risks. Here are some popular choices:
- Stocks: Investing in individual stocks can yield high returns, but it also comes with higher risks due to market volatility. Stocks are ideal for long-term goals where you can weather market fluctuations.
- Bonds: Bonds are relatively safer investments compared to stocks. They provide regular interest payments and are less volatile, making them suitable for conservative investors looking for stable income.
- Mutual funds: These funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. Mutual funds offer diversification and professional management but come with management fees.
- Exchange-traded funds (ETFs): Similar to mutual funds, ETFs offer diversification but trade like stocks on an exchange. They often have lower fees than mutual funds and provide flexibility in trading.
- Real estate: Investing in real estate can provide steady rental income and potential appreciation in property value. However, it requires substantial initial capital and ongoing management.
- 529 college savings plans: These are tax-advantaged accounts specifically designed to save for education expenses. Contributions grow tax-free, and withdrawals for qualified education expenses are also tax-free.
Each investment option has its own set of benefits and risks. It’s important to diversify your investments to spread risk and increase the potential for returns.
Cheapest Monthly Dividend Stocks
Dividend stocks are shares in companies that regularly distribute a portion of their earnings to shareholders. Investing in dividend stocks can provide a steady stream of income, which can be particularly useful for parents looking to supplement their savings.
Monthly dividend stocks pay dividends every month, offering more frequent income than the typical quarterly dividend stocks.
The benefits of investing in the cheapest monthly dividend stocks include consistent income, potential for capital appreciation, and the reinvestment of dividends to compound returns. These stocks are attractive to investors seeking regular income and long-term growth.
According to Sure Dividend, some of the cheapest monthly dividend stocks offer high yields and have a strong track record of regular payments. These stocks are typically from stable, well-established companies with solid financials. Investing in these stocks can help parents build a reliable income stream to support their financial goals.
Creating a Diversified Portfolio
Diversification is a crucial strategy in investment to minimize risk and maximize potential returns. By spreading investments across various asset classes, sectors, and geographies, you reduce the impact of a poor-performing investment on your overall portfolio.
Diversification helps to balance risk and reward, ensuring that the performance of your investments is not overly dependent on a single asset or market condition.
To create a balanced and diversified investment portfolio, consider allocating your assets among stocks, bonds, real estate, and other investment vehicles. Within each asset class, diversify further by investing in different industries and regions.
For instance, in the stock portion of your portfolio, include a mix of large-cap, mid-cap, and small-cap stocks across various sectors like technology, healthcare, and consumer goods.
Rebalance your portfolio periodically to maintain your desired asset allocation and adjust for changes in market conditions and personal financial goals.
Involving Your High School Students in Investing
Teaching high school students about investing can have long-lasting benefits. It not only helps them develop financial literacy but also instills a sense of responsibility and the importance of long-term planning.
Early exposure to investing concepts can set them on a path to financial independence and better financial decision-making in the future.
Parents can involve their children in the investment process by starting with basic concepts like saving and budgeting.
Encourage them to set up their own savings goals and track their progress. Introduce them to the stock market by explaining how it works and discussing the performance of different companies.
Consider opening a custodial investment account where they can start investing small amounts under your supervision. Utilize educational resources like books, online courses, and investment simulators to enhance their understanding.
Tools and Resources for Investing
Several tools and resources can help parents start investing and manage their portfolios effectively. Here are some useful options:
Apps
- Robinhood: A user-friendly app that offers commission-free trading and is ideal for beginners.
- Acorns: Automatically invests your spare change and is a great tool for micro-investing.
- Stash: Provides personalized investment guidance and fractional share investing.
Websites
- Morningstar: Offers in-depth research and analysis on stocks, mutual funds, and ETFs.
- Investopedia: A comprehensive resource for learning about various investment concepts and strategies.
Books
- “The Intelligent Investor” by Benjamin Graham: A classic book on value investing.
- “Rich Dad Poor Dad” by Robert T. Kiyosaki: Provides insights on financial literacy and investing.
- “A Random Walk Down Wall Street” by Burton G. Malkiel: Explains investment strategies and market behavior.
Achieve Financial Independence to Secure Your Future
Achieving financial independence and securing a stable future for your family starts with early and informed investing.
By understanding financial independence, setting clear investment goals, exploring various investment options, and creating a diversified portfolio, parents can build a strong financial foundation.
Involving high school students in the investment process not only educates them but also prepares them for financial success.
Utilize available tools and resources to enhance your investment strategy and stay informed.
Start taking the first steps towards investing early to ensure financial independence and support your children’s future. With careful planning and disciplined investing, you can achieve your financial goals and provide a secure, prosperous future for your family.
by Melissa Brock | Jul 11, 2024 | Ask the admission office |
Nothing beats the rewarding experience of getting that degree after years of hard work. However, the uncertainty of what comes after can also be nerve-wracking. As fresh graduates step into the world of adulthood, it’s important to have the best resources to navigate life, and one way to do that is by managing finances wisely.
Money management isn’t always a walk in the park, especially for fresh graduates. In the U.S., 51% of college graduates during the 2021-2022 period finished their studies with an average of $29,4000 in student loan debt, according to a CNN report. Saving up can be difficult when you start your 20s dealing with debt, but luckily, several resources like e-books can help you familiarize yourself with the nitty-gritty of finances and saving. If you’re looking for tips for getting on top of your finances, here’s a fresh graduate’s guide to the best e-book resources for money management.
Why E-Books, and Where Can You Find Them?
According to a National Institutes of Health study, students tend to prefer e-books because they’re accessible, convenient and can be downloaded and carried around. A Computers and Education study also mentioned that the interactive features of e-books, such as annotation functions, can enhance the reading experience.
While e-books are available on a variety of platforms, fresh grads on a budget will want to focus on just one to save both time and money. You can find a wide range of resources in Everand’s finance and money management category, such as Jesse Mecham’s “You Need a Budget” and Benjamin Graham’s “The Intelligent Investor” if you want to be financially wise.
These e-books are accessible through a reasonably-priced monthly subscription that’s often less than the cost of one physical book. Convenient and affordable options like these can make it easier to practice proper money management.
You can also find resources on OverDrive, where you can browse through your local library’s e-book catalog to learn the best insights on how to make the best money-saving decisions. Having easy access to helpful financial information can help kickstart a fresh graduate’s journey to managing and saving money in the long run. That said, here are some of the best e-books that can help college graduates learn about effective financial management strategies.
E-Books on Money Management for Fresh Graduates
Let’s take a look at a list of the best e-books on money management for anyone just graduating.
“The Money Book for the Young, Fabulous, and Broke” by Suze Orman
In our previous article on “Financial Planning Tips,” we mentioned Suze Orman’s classic work “The Money Book for the Young, Fabulous, and Broke” as a key source that can help you invest in financial education.
This New York Times bestselling title mentions some of the harshest financial realities that young people may encounter. It provides a realistic financial guide for how to properly manage money, deal with debts, and save for the future. It’s a perfect read for fresh college graduates looking to prepare for future financial challenges as they build their careers or future from scratch.
“Why Didn’t They Teach Me This In School?” by Cary Siegel
If you’re looking for an e-book that has more than enough information on managing money, then Cary Siegel’s “Why Didn’t They Teach Me This in School?” has you covered. The e-book contains 99 useful financial principles and advice that can help fresh college graduates improve their financial decisions so they can be debt-free and save enough money for the future.
As the title suggests, these money management tips are not typically taught in schools yet remain relevant in navigating the first few years of adulthood, so it might be best to give it a try. After all, it wasn’t recommended by Forbes, LifeHacker, and eBay as one of the best graduation gifts for college students for nothing.
“The Simple Path to Wealth” by J.L. Collins
Investing for the future need not be complicated, and that’s exactly what J.L. Collins’ “The Simple Path to Wealth” tries to say. More than an e-book, it can serve as a bible that provides simple yet crucial advice to achieve financial success based on Collins’ experiences.
These tips include saving 50% of your income, staying away from debt, and investing in index funds. The e-book also stays true to its title since it’s short and easy to read, but packed with loads of advice that fresh graduates can follow as they begin building their journey toward financial independence.
“Broke Millennial Takes on Investing” by Erin Lowry
Young people’s financial literacy rates are below 50% worldwide, according to a World Economic Forum report. This highlights the need for improved financial information, and Erin Lowry’s “Broke Millennial Takes” might do the trick.
The e-book provides basic yet hands-on details on investing, including some terminologies that might confuse fresh graduates who are looking to invest or save up money. It teaches young adults how to buy and sell stocks, when’s the best time to invest, and tips on managing student loan debt. This is a great read to help young adults get started on the basic steps of investing.
“Your Money or Your Life” by Joe Dominguez and Vicki Robin
Reading Joe Dominguez and Vicki Robin’s work, “Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence” can still provide fresh graduates with useful insights despite being first published more than two decades ago.
The classic work mentions helpful tips to manage your money properly, such as creating and following strict financial habits. The nine tips outlined in the e-book can guide fresh college grads to achieving financial independence in the long run by learning how to avoid debts and not getting too carried away with overspending whenever pay slips come in.
“I Will Teach You to Be Rich” by Ramit Sethi
Ramit Sethi’s “I Will Teach You to Be Rich” is a good read for young adults looking to pay off their student loan debts and learn the fundamentals of investing. Sethi provides real-world critical advice so readers can become successful in banking, budgeting, investing, and saving.
The e-book has strategies on how to invest properly without paying a financial advisor, as well as tips on buying a house and other big purchases that fresh college grads may be thinking of in the future. This is perfect for fresh graduates who are in their wealth accumulation phase and want to be wise in their financial decisions so they can enjoy financial freedom.
The real world can be overwhelming for fresh graduates, especially with looming financial responsibilities on the horizon. Reading these e-books can help young adults make responsible financial decisions to help them manage and save enough money for the future.
by Melissa Brock | Jul 1, 2024 | College Money Tips |
If your child has just graduated from college or the date is approaching, you (and they) are likely excited and nervous about what comes after. As I’ve advised hundreds of families on preparing for college, I can also give you a few tips for after they get their AA or BA — tip number one is to take a deep breath.
Both of you can absolutely do this.
Here are some college graduate finance tips to deal with debt, uncertainty, and the world of personal finance. The sooner they start planning their finances, the sooner they’ll be planning trips, new car specs, and, hopefully, decor for their own home.
1. Invest in Financial Education
You know dealing with your finances takes a lot of skill, and you want to help your kid deal with the anxieties of starting out. Here are some financial education resources to take advantage of:
- Books: Start with Suze Orman’s classic, The Money Book for the Young, Fabulous and Broke or Cary Sieagal’s Why Didn’t They Teach Me This in School?: 99 Personal Money Management Principles to Live By.
- Online courses: Direct them towards online courses on personal finance through platforms like Coursera or Khan Academy
- Finance blogs and podcasts: Point them to reputable financial blogs and listen to podcasts that focus on budgeting, saving, investing, and other financial topics.
- Workshops and seminars: If you find a link to financial literacy workshops and seminars offered by community organizations, schools, or local banks, share it with your kid. (If you think they’re interested, of course.)
2. Educate Them on Managing Student Loan Debt
CollegeMoneyTips has all the resources for handling student loan debts for parents and graduates, so check out articles on home equity loans and other financial tools such as refinances.
The rest is up to your child. Make sure they understand the terms of their loans, including interest rates, repayment plans, and grace periods. Here are some basic tips:
- Consider consolidating or refinancing loans for a lower interest rate.
- Make extra payments when possible to reduce the principal balance faster.
- Check out income-driven repayment plans with Federal Student Aid.
3. Build Good Credit
If your child has student loans, there is one more reason to pay them on time: building good credit. A good credit score can help them secure a loan, rent an apartment, or get a job. According to Experian, the average American has a score of 715, but anything over 670 is considered good. For starters, they can even have a fair credit score.
Besides paying student loans on time, teach them about other ways to build a solid credit score:
- Getting a secured credit card, using it for small purchases, and paying off the balance in full each month (you can help them with this).
- Paying utilities and other bills on time (and using automated payments in their banking app to do this)
- Encouraging them to monitor their credit report, check for errors, and make sure their credit history is accurate.
4. Build an Emergency Fund
I understand the economy isn’t really helping young adults leave money aside each month, but that does not mean they should give up on saving altogether. If your child doesn’t use change rounding apps or automated transfers to save, there’s a simple starting point.
With time, they should be able to save for at least three months of living expenses, which is considered a minimum emergency fund. It’s a lifesaver in case of unexpected medical expenses, repairs or additional certification opportunities.
5. Prepare the Ground for Future Homeownership
I know, they’ve just started and may be in debt, so even broaching the topic of homeownership with them may feel like you’re getting ahead of yourself. Still, preparing for it ahead of time isn’t such a bad idea. Stats show the youngest generations have particularly poor financial literacy skills, so try to motivate your child with a clear goal.
Here is what you can talk to them about:
- Student loans: Student loans impact people’s borrowing power significantly, but they do not stop them from purchasing a home. They do affect eligibility, though: debt impacts everyone’s debt-to-income ratio, which is a key requirement. While the ideal DTI is 36%, some lenders allow DTIs of up to 50%.
- Researching mortgages: With low-to-moderate income, they can go with government loans such as FHA loans. If they’ve been in the military, VA loans can help them get a home without a down payment. For homes that are a bit more expensive or young adults who have been gifted down payments, a conventional mortgage (that is, a regular loan not insured by the government) may be a better choice as it may have lower interest rates.
- Co-signers: If your child has a steady job and a regular income, and they’re set on buying a home sooner, you or another family member can help them qualify by being their co-signer.
- Assistance programs: As a first-time homebuyer, they have the right to plenty of federal- and state-funded down payment assistance programs.
Finally, if you want to get them a highly useful gift, you can always schedule a talk with a certified financial advisor — they will help them reach their goals, whether it’s paying off student loans, buying a home, building savings or even investing (time is the magic ingredient that makes investments grow!).
And last but not least, congratulations to you and your child for making it through college.
by Melissa Brock | Jul 1, 2024 | College Money Tips |
Construction careers can be a viable option for new graduates. Whether you’re looking into a residential or commercial market, the population continues to expand, and new businesses continue to open, giving this type of career the potential for a secure future. Knowing the ins and outs of construction businesses can also be beneficial for a variety of related careers or help you to start your own business.
1. Consider the Different Trades and Choose Your Interest
Within the construction industry, there are many different trade opportunities. Specialized skills are in demand and essential for helping all the different elements of residential or commercial buildings come together. Trades to consider under the construction umbrella include drywall, electrician, insulation, roofing, carpenter, heavy equipment operator, plumber, HVAC tech, mason, glazier, painter and many others. If you’re just starting out, you may initially find work as a general construction laborer or as a laborer in a specific trade area.
General programs at community colleges or tech colleges may have programs related to a specific industry or trade. Trade-based programs like construction could help recent grads to build financial stability.
2. Obtain an Apprenticeship to Hone Your Skills
You may already have certain talents or skills that will help you be successful in a specific construction trade area. However, gaining an apprenticeship is where you’ll really dive into the specifics of a trade and learn all the ins and outs. There are different standards for various trades, and work is inspected in order to ensure it meets codes and requirements. Specific businesses may also have different processes and methods for the way they approach their trade. Some may specialize in doing things a certain way or having a specific quality control process, for example. You may work with a hiring agency, individual businesses, or local trade schools to find an apprenticeship.
3. Continue to Grow Your Skills at a Reliable Company
Once you’ve apprenticed, you’ll have a solid set of skills under your belt. You may find regular work with the same company you apprenticed with or make connections among other trades and quickly find a steady job that helps set you up for financial success. Finding a solid company can be important in order to have an employer that values your skills. Since construction trades can sometimes have busier and slower seasons, it’s also important to know what to expect in terms of pay. Know whether you’ll be paid hourly, per job, or with a salary. Hourly and per-job rates can fluctuate depending on how busy the season is, but overtime may be available in busy times which can help strengthen your income. As you grow your skills, you may also be able to get work with additional responsibilities or move up in the company.
4. Take Additional Courses or Learn About Intersections of Tech and Construction Trades
As you gain your knowledge and skills, take additional specialized coursework or learn how tech can be used in more traditional construction trades and how it can provide more value and opportunities. If you’re interested in sustainable building practices, a career involving solar photovoltaic panels might be a good option. If you have strong organizational skills as well as good construction knowledge, working as a construction project manager may be in the cards. There are also college degrees, such as engineering or construction management, that are related to the construction industry and could be worth considering.
5. Consider Starting Your Own Construction Business
While working for a good construction company and doing specialized trade work can provide excellent opportunities and financial stability, for some, the option of starting their own business becomes the ultimate goal. A construction business will take knowledge, networking, and skill, but can offer a massive number of benefits and new challenges. Contractor’s licenses are typically necessary to operate your own construction business, and there are varying categories depending on the type of construction you’ll be doing. Know that there are differences when it comes to licensure in different states. North Carolina contractor license requirements, for example, require people to be at least 18 years of age, complete the exam for the specific licensure type, and meet the minimum financial requirement based on the limitation of the license. In SC, people must pass the appropriate exams and have at least two years of work experience for the requested certification. Learning the requirements for your area can help you know what to expect.
Construction Careers Can Help You Have a Successful Future
For recent graduates who are interested in building, renovating, or trades, a career in construction could be a smart solution. Growing in skills and learning the ins and outs of specific trades can help you get the financial stability you need and grow a career you love. If you’re interested in starting, you may also find overseas construction jobs on Jooble.
For college juniors, checking into how a trade like construction could help build financial stability as well.
by Melissa Brock | Jul 1, 2024 | College Money Tips |
Graduating from college is an exciting stage of life. You have a new adventure ahead as you consider your professional aspirations and what the rest of your life may look like. Maybe you have some serious plans with a significant other as well.
As you consider how the rest of your life will play out, one thing to consider is where you will live. Whether you are open to any city with a job or have a specific state you have fallen in love with, you will need a place to call home. For many recent graduates moving out of their student accommodation, the dream of owning a home may become a reality in the near future.
However, getting ready to own a home is not as simple as it sounds. Homeownership comes with a lot of responsibility, and when you are younger, this might be more responsibility than you want. That does not mean it is too early to start planning for the future. Here are some tips to consider if you want to go for buying a house as a new grad one day.
Start Building Credit
Welcome to the age of credit scores. As an adult, you will find that your credit score has a significant impact on your life. A credit score is used to assess how reliable you are as a borrower, specifically in terms of paying back debts. Debts that affect your credit score include student loans, car loans, credit cards, and home loans. The higher your credit score, the easier it will be to qualify for financing options when you enter the market for a house. The sooner you start building your credit, the better. Make sure you keep up with all debt payments. Always pay the full amount owed rather than just the minimum. Keep your credit balance utilization rates low, and consider becoming an authorized user on a credit card owned by someone who is financially responsible, like a parent. These steps will help you build a strong credit history and demonstrate your financial responsibility to potential lenders.
Find Strong Economies
Choosing the right place to buy a home is key to successful homeownership. As a recent graduate, you are probably on the hunt for a solid career if you don’t have a position lined up already. While homeownership could be a few years off, it is never too early to consider how local economies affect the housing market. For example, should you look for jobs in the tech sector in Charlotte, North Carolina, since the growing economy is great for young professionals? Is it better to shoot for a state with a low cost of living but strong economic metrics, like Texas or Michigan? Are FHA loans in Idaho easier to buy a house with because of an ideal job market? When you think about eventually buying a home, look for areas with positive economic outlooks.
Save for a Down Payment
One of the biggest obstacles to homeownership is the down payment. When you buy a house, most lenders will require a certain percentage of the home’s price to be paid upfront. For a conventional mortgage, the recommended amount is 20%. While other financing options will allow much smaller percentages, there are also closing costs to consider. If you have not already started saving money in college, building up a significant down payment can take a while. Start budgeting for the upfront costs of homeownership early so you can make smart financial decisions today.
Take on More Responsibility
Owning a home sounds like a dream to many college graduates. The space is yours to do what you want, and there is more privacy from neighbors, which you may have seriously lacked in college. However, homeownership comes with a lot more responsibility. There is no landlord or RA to help handle maintenance issues. If repairs or upgrades are needed, those burdens fall on your shoulders. Some homebuyers may not be ready to take on all the tasks associated with caring for a home. You may not even have the time to do all these chores, what with a new career beginning or taking online courses to save money for the future. Make sure you are prepared for the hard work required to care for a house before you think about buying one.
Is a Home Part of Your Dream?
Not every recent college graduate is interested in buying a home. Often, young professionals crave the flexibility of renting or having roommates to save money and keep their career options open. However, someday, you may desire the investment opportunity and privacy of your own home. Planning for that eventuality now is the best way to prepare for it. Think about how you can build your credit score, save for a down payment, and put yourself in the best position to become a successful homeowner in the future.