As they graduate from college and begin their careers, many young people often discover that the “real world” is very different from what they thought it would be based on the glamorous images of the make-believe lives of 20-somethings on some TV shows and in some movies - See more at: http://news.davidlerner.com/#sthash.iZt3FDLr.dpuf

2. As they graduate from college and begin their careers, many
young people often discover that the “real world” is very
different from what they thought it would be based on the
glamorous images of the make-believe lives of 20-somethings on
some TV shows and in some movies.
Based on these images, some young people expect to start their
careers in jobs that will support extravagant lifestyles that
include high-end apartments and condos, fancy cars and plenty
of eating out and entertainment. If they don’t earn enough
money to pay for these kinds of luxuries, they may assume it’s
OK to take on debt in the pursuit of this kind of lifestyle.

3. “It’s critical that young people just starting out
in their careers have a realistic view of what the
real world is like from a financial perspective,”
says David Lerner Associates Branch Manager
John Koene. Here are four strategies that Koene
recommends to help young people get their
financial lives started off on the right foot:

4. Establish and stick to a
budget.
• Budgeting may sound very un-cool to 20-somethings, but it’s vital
to making sure that expenses don’t exceed income and lead young
people into a debt spiral that can set them on the wrong financial
course for the rest of their lives.
• “Create a budget starting as soon as you move into your first
apartment and receive your very first paycheck,” says Koene. “Start
with your income, not your expenses, and then plan your expenses
around how much you make. Ideally, you will build some margin
into your budget between your income and your expenses — this
represents money that can be saved for both short- and long-term
purposes.”

5. Build an emergency savings fund.
• Also sometimes called a “rainy-day fund,” this is money that is
stashed in a liquid account (such as a bank savings or money market
account) so it can be easily withdrawn if needed for unexpected
expenses or in the event of a job loss.
• “Building up a rainy-day fund should be one of a young person’s
first financial priorities,” says Koene. “When you have this money
set aside to cover things like car repairs or other unexpected
expenses that pop up, you don’t have to pay for them using a credit
card.” A goal might be to accumulate between six and twelve
month’s worth of living expenses in a rainy-day emergency savings
fund.

6. Open and regularly contribute
to a retirement savings account.
• A rainy-day savings fund would be considered short-term savings,
while a retirement account is considered long-term savings.
“Retirement may seem like a long way off for young people, but
the power of compounding interest over time makes the early years
very important when it comes to saving for retirement,”
says Koene.
• Many young people don’t think they earn enough money to save anything
for retirement, but saving even a little bit is better than saving nothing at
all. This is especially true if your employer offers a 401(k) plan match.
“This is the closest thing there is to free money,” says Koene.

7. • Excessive debt may be the greatest obstacle to young people achieving
their long-term financial goals. “Debt is the young person’s biggest
financial enemy,” says Koene. “It’s like a weight tied around their ankles
that drags them down financially.”
• Paying back student loan debt as quickly as possible might be the first
priority. “Create an aggressive debt payoff schedule and stick to it,” says
Koene. “Then be very cautious when it comes to taking on new debt —
especially credit cards. Paying for purchases with cash or a debit card is
one way to avoid racking up excessive credit card debt.”
Be careful with debt.

8. Material contained in this article is provided for information purposes only
and is not intended to be used in connection with the evaluation of any
investments offered by David Lerner Associates, Inc. This material does not
constitute an offer or recommendation to buy or sell securities and should
not be considered in connection with the purchase or sale of securities.
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