Managing your money on the road ahead

“The most humble thing in life is to live within your means,” says James Shepherd, a certified public accountant and financial planner from Richmond. “The sooner you learn it, the quicker you’re going to be successful.” It’s particularly difficult for young people, who are the target of so much advertising and peer pressure. Developing good habits now will pay off in the years to come, whereas poor financial habits can bring years of stress. Here are some strategies to help you get off to a solid start:

These next years can be financially challenging. “Students come out of school into a world where there are a lot of ways to spend money and limited ways to make money,” says Shepherd. Don’t worry, there’s hope. Start smart spending and saving habits now and financial independence is within reach.

The Virginia Council on Economic Education provides these additional strategies:
• Don’t expect something for nothing. Be leery of advertisements, salespeople or other financial offers that promise anything free.
• Compare interest rates. Obtain rate information from several financial services firms to get the best value for your money.
• Pay yourself first. Before paying bills and other financial obligations, set aside an affordable amount each month in accounts designated for long-range goals and unexpected emergencies.
• Your credit past is your credit future. Be aware that credit bureaus maintain credit reports, which record borrowers’ histories of repaying loans. Negative information in credit reports can affect your ability to borrow at a later point.

Next Steps:
Once you’ve got a grasp on your money, it’s time to start saving for the future. Even if you’ve only got $20, you can start a savings account, savings bond, or mutual fund that will pay off tenfold in years down the road.

Create a budget to get a sense of your income and expenses
• Write down every expense for one month — meals, tickets, parking, clothes and entertainment.
• Compare those expenses to how much you’re earning (after taxes).
• If your expenses routinely are larger than your earnings, you’re headed into deeper debt.

Find out what things cost and what new work-related expenses you may have
• Research what it will cost to buy a professional wardrobe and start accumulating these clothes slowly.
• Learn what rent and utilities are likely to cost you.
• Determine what the cost of living is for your area and how that differs from other areas.

Borrow wisely
• Figure out the monthly car payment for a new and a used car.
• Figure out the monthly mortgage or rent payment for houses and apartments in your area.
• List some of the other expenses associated with home and car ownership.

Be careful with credit
• Research your card first and choose one with a reasonable interest rate and low transaction fees. You can compare cards at Creditcard.com.
• Consider the advantages of using a debit card versus a credit card.
• Pay your bills on time and for the full amount.

Start saving now
• Figure out how much money you will have if you deposit a set amount of money each month into a savings account.
• Check out the Savings Growth Calculator here