It’s June- a month usually reserved for the ever-so-popular “Dads and Grads” marketing schemes. This got me thinking about the advice a dad would give a Grad about money and investing, but I thought I’d jump on the bandwagon this year! Since this really should come from Dad (which is 90% of Financial Advisors and I’m a mom, but I digress), I am going to ask a reliable source for advice for this month blog. A father figure to millions of young people and someone they turn to for sage dad advice in 2025: ChatGPT.
So here are your top 5 Finance Hacks for young people entering the workforce- written by a large language model with my commentary to make sure of two things:
a) this is still written by me
2) this is actually true. Kim’s Personal Sage Dad Advice: you can’t trust everything you read on the internet. Expect from me. I’m okay.
1.Start Budgeting from Day One (Kim Approves)
One of the first things you should do after landing your first job is to create a budget. Budgeting helps you track your income, manage your expenses, and ensure you're saving for your future.
· Track your income and expenses: Use budgeting apps to simplify this process.
· Follow the 50/30/20 rule: Allocate 50% of your income to needs (rent, utilities, groceries), 30% to wants (entertainment, dining out), and 20% to savings and debt repayment.
· Avoid lifestyle creep: As your income increases, resist the temptation to overspend. Keep your lifestyle consistent and focus on saving or investing the extra money.
2.Build an Emergency Fund (Kim Approves)
An emergency fund is a must-have safety net that covers unexpected expenses like car repairs, medical bills, or even job loss. It’s essential for financial stability and confidence.
· Aim for 3-6 months of living expenses: This is your cushion for unexpected events.
· Start small: Even setting aside $50 or $100 a month will help you build your fund over time.
· Keep it accessible: Store your emergency fund in a high-yield savings account so you can access it quickly when needed.
3.Contribute to Retirement Accounts (Kim Approves)
The earlier you start saving for retirement, the better. Compound interest works best when your money has time to grow, so it’s crucial to start early—even if it's a small amount.
· 401(k): If your employer offers a 401(k) with a match, contribute enough to get the full match.
· Roth or Traditional IRA: If your employer doesn’t offer a 401(k), open a Roth IRA or Traditional IRA to start saving for retirement.
· Start with small contributions: Even $50 a month can build significant wealth over time.
4.Tackle Your Student Loans Strategically (Kim Approves but with an asterisk. Be sure to also research student loan forgiveness programs and company matching plans to help repay with debt with you.)
Student loan debt can feel like a heavy burden, but with a smart strategy, it’s manageable. The key is to attack your debt early and efficiently.
· Consider income-driven repayment plans: If you have federal loans and are struggling, income-driven repayment plans adjust your monthly payment based on your income and family size.
· Make extra payments: Whenever possible, try to make extra payments toward your loans to reduce the total interest you’ll pay overtime.
· Refinance or consolidate: If you have high-interest loans, look into refinancing for a lower rate (but only do this if you’re confident in your ability to manage your loans).
5.Build Your Credit Early (Meh. I feel this is not worthy of being on the list since I’ve never met a credit card company that says you shouldn’t build credit early, but I agree with the bullet point about paying your bills on time and having a low debt to income ratio. Those are solid points)
A good credit score is essential for big financial milestones, like renting an apartment, buying a car, or qualifying for a mortgage. Starting to build credit early will help you achieve these goals.
· Get a credit card: Apply for a credit card with no annual fee to begin building your credit. If you’re new to credit, consider a secured card.
· Pay on time: Always make payments on time, and if possible, pay off your balance in full each month to avoid interest charges.
· Keep your credit utilization low: Aim to keep your credit utilization under 30% of your total credit limit.
Bonus Tip:Avoid Lifestyle Inflation (Kim double approves! This is the silent killer of healthy financial habits. Master this and you will be ahead of your friends when they are posting photos on Insta from their two-week vacation at age 50 and you are doom scrolling guilt free…because you are already retired.)
As your salary grows, it’s easy to start spending more on things like dining out, shopping, or upgrading your living space. Instead, keep your spending in check and direct any additional income toward savings or investments. Small sacrifices now can pay off big time later.
By following these tips, you'll set yourself up for a healthy financial future. It's all about building strong habits early, so you can enjoy financial security as you grow in your career. Start smart now, and your future self will thank you! (That was ChatGPT BTW and it totally sounds like me, so I’m leaving it. Kinda fun. Kinda scary.) Back to regularly scheduled human programming next month!