Top 3 Financial Mistakes Young Professionals Make

By Credit.com

Entering the real world is exciting. For young professionals this often means getting your first career-track job, moving into your own place and taking full control of your finances.

While everyone wants to get started on the right foot, there are some common mistakes young professionals make that can have long-lasting impact.

Figuring It Out Later

This is a time in your life when you may find yourself making many big decisions in a small amount of time.

Don’t say yes and figure it out later. Before you sign a lease or mortgage, determine whether you can afford it.

The easiest way to do this is to create a budget.

You may think you need to wait a while until your expenses “normalize” since when you first move into a place, there can be one-time costs like furniture and security deposits.

But if you wait a few months, you may find yourself already in some serious debt.

Do some research and make a budget immediately.

Then adjust your budget when you see how much money you are bringing home and how much you are really spending.

It’s best to start out tracking your spending right away, instead of playing catch-up later.

Assuming You Will Make More

You may be disappointed by your first salary. You may work in an industry where big bonuses are normal.

Regardless, plan your finances around the salary you are guaranteed right now. This gives you the freedom to make choices in the future.

If you are living beyond your means now, that raise or bonus will only go to paying off debts.

If you budget for your current salary, you can use that raise or bonus to boost your emergency fund, increase your retirement savings, or treat yourself.

Don’t spend your future self into a corner.

Read the full article online... 

 

Live, and Let Live…Spend, and Let Spend: What Does Living the Good Life Mean to You?

By Beth Kobliner

One of the biggest concepts in behavioral economics these days is the role that “choice” plays in our financial lives.

Sounds obvious, but it’s the simple idea that we have a finite amount of money, so we need to choose wisely how we spend it if we want to live a life that we consider good.

But what really is the “good life?”

In August’s Journal of Socio-Economics (yes, I confess that I read it for fun!) there was an intriguing book review of How Much Is Enough? Money and the Good Life by R. Skidelsky and E. Skidelsky, a father-son team—the dad: an economist; the son: a philosopher.

In the review, researchers Benjamin Nienass of Yeshiva University (New York) and Stefan Trautmann of Tilburg University (the Netherlands) outline those factors that the Skidelsky team believe to make up the good life:

“Health; security (low uncertainty in life); respect; personality (autonomy); harmony with nature; friendship (community, social capital); leisure (goal-less activity)…”

I thought this was a compelling list. Certainly more thoughtful than beef tacos and beer on a Sunday afternoon while watching football—many of my friends’ notion of living the good life.

But the reviewers then go on to say that this one-size-fits-all definition may not really be right. They argue that everyone’s view of the good life can be varied, and you can’t really account for the trade-offs that people are willing to make in such a list.

“A doctor,” the reviewers write, “ who feels called to help people may be willing to work 60 hours, sacrificing leisure and family life. Will he subscribe to this definition of the good life?”

This got me thinking about my own upbringing and the choices that my parents made in order to give us their version of the good life.

As I mentioned in my last column, my parents were frugal in a good way. They made smart decisions about spending money that allowed them to live the life that they wanted to live.

We certainly did not have everything we desired, but we definitely had what we needed.

Though they were careful with cash, they didn’t scrimp on those areas that really mattered to them. Healthcare was number one—damn the cost.

We saw the very best doctors even if we had to go outside the network of my dad’s healthcare plan. (Of course, 20 or 30 years ago, healthcare wasn’t nearly as expensive, but it was still a big cash outlay for my dad, an educator, and my stay-at-home mom.)

Weighing Priorities

Another priority: living in a comfortable home. That’s not to say that they didn’t hunt around for the best sale price on furniture or appliances. They sure did. (I recall many a Saturday evening trudging through a mall or department store as we compared prices on big-ticket items.)

But they believed that buying a quality refrigerator or a well-designed central AC system was incredibly worthwhile—even though buying such higher priced items was not routine in most families in the ‘70s.

Their logic—and mantra: We spend 365 days a year—minus a small, local family car trip here or there—in our modest home, which should be our family’s comfortable refuge.

Read the full article online. 

 

In Debt…Again? How to Break the Borrowing Cycle

By Credit.com

You hate debt.

You got out of debt once and vowed you’d never let it happen again. But here you are – stuck in debt again.

It’s not fair! How did it happen so quickly?

And what can you do to create a permanent debt solution so that you never repeat the pattern again?

The Permanent Debt Solution

Defining the source of your debt problem is critical to solving it.

You believe your debt is a financial problem, but it’s actually a personal problem masquerading as a financial one. That’s why a permanent debt solution eludes you.

Treating debt as if it were a financial problem is similar to trying to cure the flu by blowing your nose. You relieve an obvious symptom but don’t address the underlying cause.

When you don’t address the cause, you don’t get better.

In other words, debt is often just a symptom of a much larger problem: an addiction to an unsupportable self-image and lifestyle that results in overspending.

Until you address the real problem, the symptom will recur, which may explain why you are in debt again.

What that means is debt’s real cause is often personal life habits and attitudes that result in overspending.

The rule is simple – you must spend less than you earn. There’s no way around it.

However, teaching a chronic debtor to spend less and earn more is like telling an overweight person to lose weight by eating less and exercising more.

Everyone already knows what to do. The difficult part is actually getting it done.

How to Slay the Debt Monster

Sure, you want to get out of debt as fast as possible, but superficial financial solutions result in repeat offenders.

Using debt consolidation, or transferring balances to a HELOC or a 0% credit card, or selling assets such as a house, boat or car does not address the root cause of the problem.
You are trying to relieve the symptom by looking only at financial issues.

Instead, what you must first do is figure out what is causing your debt.

What are all the ways you spend more than you earn? But there are ways to identify these habits and change them.

The permanent cure is to plug all the habitual ways you leak money so that you never go into debt again. This isn’t sexy, but it permanently solves the problem.


You must persist in plugging these leaks until you are spending less than you earn.

It may take you months (or years) to achieve this objective.

That’s OK.

Read the full article online. 

10 Tips to Turning Your Internship Into a Full-Time Gig

“10 Tips to Turning Your Internship Into a Full-Time Gig” was provided by POPSUGAR Smart Living.

For a lot of us, graduating from college was the easy part — it was finding a job afterward that made us wish we could start freshman year all over again.

This stage of life is an unfortunate time that every postgraduate must endure.

If you weren’t given a trust fund or poached by recruiters, then you know this “rite of passage” all too well.

Searching the web for hours on end, connecting on LinkedIn, and completing countless applications without any response becomes your daily routine.

I went through the same experience after I graduated college.

Even with four internships under my belt, I had no idea just how competitive the job market was.

I realized that the best way to get my foot in the door was to expand my search. I started looking for internships (that would accept recent graduates) with the hope it could lead to a job offer.

Lucky for me, it did!

Here are 10 tips on how to turn your internship into a job:

Make friends

It’s tough to be new in the office, especially if you’re an intern.

That’s why it’s so important to put yourself out there and get to know your co-workers.
Take an extra trip to the water cooler or bathroom — the more people you meet in these communal spaces, the better.

Here are some conversation starters!

Another great way to mingle with new co-workers is to join in on any company events.
Go to happy hours, game nights, and other office get-togethers to show your fun side.

Be professional

Just because you are one of the youngest in the office doesn’t mean you have to act that way.

Stay professional, and show that you are mature.


You can still crack jokes and have fun; just avoid talking about partying with your friends every weekend.

If your co-workers view you as responsible, then they will trust you with more projects.

Ask the right questions

After you receive an assignment, don’t be afraid to ask for clarification if the directions are unclear.

You want to avoid completing a task incorrectly because you were too nervous to ask questions.

However, try not to bother your manager with tons of obvious questions if the answer can be found on the Internet or an office training manual.

You don’t want them to regret giving you the project when they could have done it themselves in the first place.

Read the full article online...