Help graduates be financially responsible

This was originally published on Monday, July 11 ,2016 in the Pacific Daily News.  Click here to subscribe to the PDN.

Every day we make decisions that have good or bad consequences for our future. It is important to teach your new high school graduate about finances before starting off in the real world. Doing so helps them make smarter choices in the future. Becoming financially responsible is a big step into the real world and will become one of the largest challenges they will face.

  • Student loans. The cost of university is becoming more and more expensive. Due to the increase in price, many more college students are taking on student loans. Many students think that because the payment is deferred until they graduate it gives them leeway to use it for other purposes than just for school needs. Take only what you will need for tuition, books, supplies and housing. With a tough job market, it can take some time to find a job which will allow you to start paying off your loans. You will be happy to have taken the bare minimum.
  • Taxes. If you are going right into the job market or working while in school, it is imperative that you start paying taxes. Just because you don’t make much does not exempt you from paying your taxes. Nonpayment can hurt you in the long run. It could cause your wages to be garnished or it could prevent you from being hired for a job.
  • Emergency fund. Start saving for an emergency. You will be thankful that you have an emergency fund if your car breaks down or you lose your job. The best time to start is when you have fewer responsibilities. Once you get a mortgage, children and insurance, it will be harder to put money aside.
  • Think about your credit. Your credit history will pretty much follow you around for the rest of your life. Ensure you make your payments on time.  Even though right now you are not in need of a mortgage, some day you will be and you will be thankful that you have a good score. Most utility agencies, jobs and landlords now run credit checks on their customers to see how credit worthy they are.
  • Health. Continue to take care of yourself. Get annual checkups for your dental, health and vision. One of the largest expenses most people pay is for medical attention. Eat healthy, get lots of exercise, and stay away from drugs and alcohol. Be sure you are insured, it will help tremendously when it comes to paying for doctor’s visits, medication and treatments.
  • Invest. Retirement may seem a long way off. Eventually you will want to retire. How old do you want to be when you retire? Your decision should decide how aggressively you invest. If you want to retire at 50 years old and travel the world, put more money aside. Open an IRA, invest in stocks, bonds or even real-estate. Social Security is no longer enough to retire on.

There is a lot to think of as a young adult. If you plan and stick to your plan, your financial future is a bright one. Take care of yourself and your finances. Your future self will thank you.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him atmoneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

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