AICCCA Provides Tips for Graduates -
Financial Steps to Take Now for a Bright Financial Future
Fairfax, VA - May 4, 2006 — Graduates will soon be throwing up their caps, shedding their gowns and heading into the job market. Many will begin managing money from their employment incomes for the first time. Knowing the right financial steps to take during these first earning years is essential for a healthy, prosperous financial life.
"Many of us wish that we had been better prepared when we first started earning money," said David Jones, president, Association of Independent Consumer Credit Counseling Agencies. "The financial decisions made when we are young can have a tremendous influence on our future financial lives. We want to help this year's graduates make the most of their finances and start out on the right financial path."
AICCCA offers graduates the following financial steps to take for a bright financial future:
Create a spending plan. You wouldn't leave on a trip without a good idea of where you were going and how you were going to get there. A spending plan is your map for staying on track financially. Write down your income and expenses and make sure that the income side stays more than the expense side. For help creating your plan visit bankrate.com.
Save. When you first start out financially it is tempting to put off saving money, just because there is not a lot of it. Fight this temptation and put something aside each month. You will never again in your life have the magic of compounded interest for more than forty years. For example, if you invest $2,000 a year beginning at age 25 and invest for only eight years and then stop, you will have earned more money by age 65 than if you started investing at age 35 and invested $2,000 every year for 32 years. Not to mention that an emergency savings cushion of three to six months of living expenses can save you from unwanted credit card debt.
Pay off student loans and any other debt quickly. You may be tempted to consolidate any student loans that you have to lower your monthly payment. If you decide to do this, try to pay the loan off early or you will end up with more of a total payout than if you did not consolidate. Pay off any credit card debt that you may have accumulated while in school as quickly as you can and don't charge any more.
Plan for housing costs. Depending on your location, housing costs can be a large expense. Your goal is to keep housing costs at no more than 25 percent of your take home pay. You might consider rooming with someone to help share expenses if you find housing that is too pricey for you alone.
Establish and use credit wisely. Credit is a valuable financial tool. Without it most of us would not be able to buy a car, a home or many other large purchases. The situation you want to avoid is using credit to extend your income to buy things you don't need. If you don't have the money to buy it, save the money or skip the purchase.
Obtain appropriate insurance. Insurance is essential for maintaining financial wellness. Medical expenses were a contributing factor for more than 50 percent of persons filing bankruptcy last year. An uninsured loss of property, health or even life could spell immediate financial trouble. Auto, health, life, renter's or homeowner's and possibly disability are all insurance products to review.
Founded in 1993, Association of Independent Consumer Credit Counseling Agencies (AICCCA) is a national membership organization, established to promote quality and consistent delivery of credit counseling services. AICCCA and its members are focused on improved creditor relations, efficient processes and advanced technology to best serve clients and creditors. AICCCA members are independent nonprofit agencies that advocate for debtors, counsel millions of consumers annually nationwide and provide debt management services to consumers with excessive unsecured debt. For more information or to contact an AICCCA member office call (800) 450-1794 or visit www.aiccca.org.
