Q: I’m a recent college grad and just started a job. What financial planning should I be doing?
A: A good place for young adults to start the process of financial planning is to create a budget. Determine your monthly fixed and committed expenses such as rent and loan payments. You will also have to think about the cost of items that you can not live without such as food, utilities, and clothing as well as discretionary expenses, which are things you want but don't necessarily need. Focus on reducing expenses and paying down debt. If you owe balances on high-rate credit cards try to transfer them to a low-interest card or pay them off with a bank loan. Then, pay the most that you can each month to reduce the balance and avoid adding new charges. You should also start building a cash reserve to pay bills if you become disabled or unemployed. Try to save three to six months’ worth of expenses in a money-market account. Also, contribute or increase your contributions to a 401(k) or IRA. If you stay focused and determined your finances will soon be in good shape.
Crystal Faulker is a C.P.A. with Cooney, Faulkner, and Stevens, LLC - Certified Public Accountants | Business Advisors.
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