Graduates, consider your financial future

May is known for the beginning of summer and graduation.

As graduation approaches,m any college and high school graduates soon will be entering the workforce.It’s an exciting time,and an important time for personal finance,because young adults have something valuable to protect:a clean financials late.

If you’re a new graduate,now is the time to make the most of your fresh financial start.  After graduation and before the start of work,you have time to lay the groundwork for managing your personal finances. You also have time to consider the financial goals that will guide you over the next few years,as you set out into the world of work.

Goals are a great place to begin, because they focus your behavior and give you motivation to stay on track. Once you define your goals,personal financial management is a natural next step .You will be more driven to pay closer attention to your spending and saving and search for sources of income, in order to achieve those goals.

Here are a few goal suggestions to get you started:

An emergency fund. It’s a sign of financial independence to be able to cover emergency expenses on your own. As soon as you start working,this fund should be a high priority item .Not only will you be prepared for emergencies, but you’ll also be able to avoid dipping into your other savings goals or using credit to fund the extra expenses.

Try to divert as much as you can into your emergency savings fund, as soon as possible .If you need an initial goal, calculate three months of living expenses and aim for that number.

Retirement savings. It may seem like you have all the time in the world to save for retirement. But the truth is that saving as early as you can makes much more of an impact on your retirement savings than money put away later in life. The more time your money has to grow and compound, the better.

A great first step in understanding retirement as a new graduate is to look into Roth IRAs and learn how they work. W hen you start your first full time job,ask about retirement plans and any matching contributions offered by your employer.

Major expenses.  If you plan to purchase a major expense in a few years, that goal can seem so distant that you simply put it out of your mind. But now is a great time to think about those expenses, because you can save incrementally every month for those needs.

It takes time to put together the down payment for a car,and even more time to accumulate the down payment for a house. If you plan to move into a new house or apartment, you also need savings for furniture and related moving expenses. If you look into costs and form a plan now, you can make the most out of the time and earnings that you have.

By identifying your large goals early in your career, you can begin making small savings contributions toward those goals,and build up the habit of saving for specific needs.

That habit can make a major difference in your finances as you go forward in life.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 19 years experience in retail banking and with financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, email him at moneymattersguam @ yahoo. com .

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