Create a Financial Game Plan During Your Wealth-Building Years

These core competencies will help create a successful path in your career

As college students gear up to enter the workforce, we have some practical tips to help put a solid game plan in place. As a new graduate, consider your finances, develop emotional intelligence, add value to your work team, and dress for success.

Establish a Financial Plan Early

Colleen Umnus, Universal Banker at Coulee Bank in La Crosse says, “When I first entered the workforce and started receiving steady paychecks, I wanted to spend my money on all things fun. I didn’t want to buy responsible things.” She quickly learned that creating a budget was the only path that would set her up for success, especially when she needed to start paying back student loans. She says having a budget is like a blueprint for how to live your life financially. “I cannot imagine living without that blueprint!”

Umnus says not having a budget makes giving in to impulse purchases way too easy. While impulse purchases are fine, you need to prepare for those. “Set aside $10-$20 per week for impulse purchases.” While it may sound counterintuitive to plan for an impulse purchase, you want to have a buffer with your finances to buy an extra cup of coffee at the end of the week. If your budget is too strict, you won’t want to stick to it.” More budget tips can be found here.

Before buying an item stick to the “To Buy or Not Buy” motto. Umnus says, “Ask yourself several questions before you purchase an item especially if the item is over ten dollars.” How many hours do I have to work to pay for the item? Have I thought about the item for at least two weeks? Can I rent or borrow the item instead of buying it? Review the infographic included with this article.

An Emergency Fund is Essential

Umnus says, “A rule of thumb is to have six months of money available to you if you encounter an emergency. If you lose your job, break your leg, or get involved in a car accident, you want money to live on.” She says as you're starting in the workforce, you probably won’t have a six-month cushion and that’s okay. The point is to start the fund. Set aside twenty dollars per week. In one year, you will have a little over one thousand dollars. For more information about the importance of an emergency fund and how to build one click here.

A Strategy for Paying Student Loan Debt

Typically, there is a six-month grace period before you start making payments. Depending on incurred debt, it can take decades to repay, so set yourself up for success. Umnus says, “Pretend your grace period is only five months and build in a one-month buffer.” Having a buffer gives you breathing room if something unexpected comes up in the future. You are already one month ahead.

If possible, pay more than the minimum amount. This helps reduce the debt faster while saving you money on interest. The sooner your debts are paid off, the sooner you can save for your retirement.

Invest in a 401(k) When You Start Working

A 401(k) is a type of qualified retirement plan offered by many employers that allows an employee to deposit pre-tax dollars from each paycheck into a retirement account. There are varying contributions depending on the employer. For example, an employer may match one hundred percent of the employee's contribution up to four percent.

While it is difficult to envision life decades down the road, you want to be prepared with a retirement account above and beyond Social Security. The earlier you start, the more time you have to build a nest egg. Plus, the interest compounds making you even more money.

Umnus says, “In terms of investing, don’t put all your eggs in one basket.” Even though money goes into Social Security each paycheck, it will likely be one of a three-prong approach to retirement. When you retire, you may want your 401(k), Social Security, and any side investments like real estate, stocks, bonds, mutual funds, etc.”

Skills to Take into the Workforce

Emotional Intelligence is another key piece to finding success in the workplace. “Develop new skills every week. Set aside time to learn something new even if it’s something small. You want to become so good you are irreplaceable.” Being irreplaceable means taking on new job duties, becoming an effective communicator, learning to work well in a team environment, and being empathetic to those around you.

The last tip is to dress for success. This may not seem like an obvious skill to take into the workforce, but dressing for success makes a great first impression. Dressing well also gives you confidence. That confidence leads to more creativity and better productivity.

“You don’t have to spend a lot of money on a new wardrobe. Second-hand stores are offering office-ready clothing,” says Umnus.

The Bottom Line

Heading into the workforce is a major milestone and the perfect time to set yourself up for financial success. Develop good habits early on, stay prepared for the unexpected, and keep growing in your career.