“When you invest, you are buying a day that you don’t have to work.”
Aya Laraya
- Retirement Plan
On your first day, you typically meet with HR or the onboarding team. During that time, you will have the opportunity to set up your retirement plan. This could be a 401K, 403B or Roth IRA. This tool will provide you a comfortable retirement in later years. Saving 15% of your income is the minimum that you should be withholding. My company has the option to increase your percentage by 3% every year until you max out. Assuming I get at least a 4% raise, I won’t notice the gradual increase in savings. Ask your benefits specialist how your money will be invested. You may need to allocate where your money goes. Not sure what to invest in? I recommend the 70/20/10 mix. 70% in the S&P 500, 20% in the total stock market and 10% in bonds. The index funds look different depending on the brokerage company your organization uses. Here’s three examples of indexes and their respective brokerages.
| S&P 500 | Total Stock Market | Bonds | |
| Charles Schwab | SWPPX | SWTSX | SWAGX |
| Fidelity | FXAIX | FSKAX | FXNAX |
| Vanguard | VFIAX | VBMFX | VTSMX |
If your company doesn’t offer a 401K program, that’s okay! You will need to setup your own post tax retirement plan. The most popular option is a Roth IRA. Every brokerage firm offers one. For 2023, the maximum contribution amount for those under 50 is $6,500. That’s an increase of $500 from 2022. Those over 50 can contribute $7,500. Remember, your retirement is your responsibility. I want you to live the life you want when you get older.
2. A Budget
I know that this is a dirty word for some, so call it whatever you like. Might I suggest a monthly financial plan? Before the month begins, you need a map for where your money is going. College is often a time of living off of little. Now that you have more money, accumulating things is too easy. I caution, going from one extreme to another. Remember, two things can be true at the same time. You can have a budget line for your wants and a budget line for needs. I prefer the zero-based budget. This type of budget allocates every dollar of net pay until you are left with “zero” dollars. This is an example of what a zero-based budget looks like:
| Net Pay $3000/month | Budget Line |
| -$600 ($2400) | Half of rent |
| -$250 ($2150) | Utilities |
| -$100 ($2050) | Gas |
| -$300 ($1750) | Charitable Giving |
| -$300 ($1450) | Savings |
| -$250 ($1200) | Free Spend (events, clothes, food, etc.) |
| -$125 ($1075) | Streaming Services |
| -$300 ($775) | Groceries |
| -$125 ($600) | Investments |
| -$600 ($0) | Debt Repayment |
Every dollar is accounted for, going towards either a bill or savings. I worked as a waitress where my hours and pay weren’t the same month by month. This is the case of employees with fluctuating income. At the end of each pay period when I knew how many hours and tips I received, I would make a rough estimate budget. One tool I used a lot was AP’s Hourly Wage Calculator. I could calculate what my net pay (with taxes and benefits deducted) would be.
3. Debt Payment Plan
If you are graduating with no debt, I am so happy for you! Please feel free to skip to step 4. If you are one of the 45 million people graduating with student loans you need a plan to get out of debt as efficiently as possible. There are plenty of debt payoff plans out there. The two most popular are debt snowball and debt avalanche. The debt snowball was made popular by Dave Ramsey. This involves paying your smallest debt first and using that minimum payment to snowball into the next one until all your debt is paid off. The debt avalanche method involves paying off the debt with the highest interest rate first and then using that minimum payment to pay off the next highest interest rate debt. We chose the debt snowball method because we were gifted a Ramsey+ membership from our church. It is nice to see those small debts being scratched off once it is paid in full. For us, it keeps us motivated to continue the journey. We are scheduled to be debt free in October 2025. Whatever plan you choose, being intentional and knowing what you owe is key to getting out of debt.
4. Automation
Set it and forget it, you can’t miss what you never had. This is the key principle when automating your savings and investments. You can do this by taking a percentage or dollar amount from your paycheck before it is direct deposited. During onboarding, when you are setting up your retirement accounts, you are also providing your direct deposit information. This is the time where you can usually direct how you want your funds distributed. I have two checking accounts and two savings accounts. The first checking account is strictly for paying bills. The other is for free spending. The free spending account is about 20% of my net pay. A free spend account allows me to spend money freely without guilt because every dollar is allocated to whatever I want. The online high yield savings account (HYSA) is for the emergency fund. Once I am finished paying off our debt, about 20% of our gross pay will be automated to that account. The second, is for immediate emergencies such as car repair and medical that cannot wait 24 hours. This account is a set dollar amount of $1000.
5. A Wise Mentor
A good mentor is usually not the loudest nor most boastful person in the room. Most people don’t look up to them. This person is humble and wants to see you succeed. They are content in their role and will do whatever they can to see you grow at your job. Seek someone who is willing to give you their time and constructive feedback. The best shepherds guide their flock to growth and development opportunities. Be open to talking to people in other departments if you cannot find someone on your team. Remember, your relationship with your mentor should be authentic. You are not taking from them without giving something in return. You are smart, that is why they hired you. You have something to offer your mentor as well. Find out what that is and strive to make them better as well. Finding a good mentor is not easy, you may have to “interview” many people to find the right person. That is a part of the process and is normal. Don’t forget to lean on your family and community. They have been in the workplace for years and have experience with work culture to share.
Now that you’ve turned your tassel, make your financial future one less thing to worry about. Automate your savings and investing and make a plan for paying off your debt. Sit back and in no time, you will be financially set. Which tools seems the most important to you?
The principles of money 
Leave a comment