Take the Quiz.
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Slides for the Financial Wellness & First Professions webinar can be found at http://go.uillinois.edu/firstprofessionsslides.
By participating in at least three Earning Badge-eligible events, you could earn a digital badge to enhance your online professional portfolio. Learn more about the Financial Literacy Badges Program by visiting: badges.illinois.edu/usfsco.
Setting the Stage
The webinar covered several aspects of addressing your finances as you transition into your first (or a new) professional role post-college. We'll be highlighting several resources in this article that were discussed during the webinar so you can better accomplish your personal & professional goals.
You can use this worksheet from North Park University to help you create your own checklist of concepts to consider and questions to ask in preparation for a first (or new) profession.
Identify expenses associated with a first (or new) job.
One of the myth mindsets that we addressed during the webinar was, "The money is coming in so I can start spending now!" Unfortunately, this is a common mistake where new professionals view their income as a "windfall" and start spending before actually getting their first paycheck or getting acclimated to the costs of their new, post-college lifestyle while balancing existing financial responsibilities.
It's important to identify what all of your expenses will be, paying particularly close attention to anticipated costs of your profession. Below are a few examples of common expenses associated with professional positions.
Does your new job have a strict dress code? Will you need to expand your wardrobe? What are the costs of those new items you'll need to add to your clothing inventory like a suit or new shoes?
Are there other expenses associated with your professional appearance that you'll need to account for (e.g., haircuts)?
You may want to consider both the financial costs as well as the time costs associated with your commute.
There are several tools that you can use to compare costs of the commute, but this calculator from Bicycle Universe can compare costs of owning a car versus not owning a car, including costs of a bike, riding the bus, use of taxis & car share fees & trips.
If you are relocating to a new area, the costs of food can vary drastically from what you're used to. Consider those cost of living differences. A cup of coffee where you live could be a lot more (or less) somewhere else.
In order to help you try to control the costs of workday meals, you can use the following tools:
Understand personal debt and best practices in addressing it.
Credit can impact your employment in a variety of ways. For example, many employers in the United States use credit checks as part of a potential employee's background check to identify how responsible they will be at work or how much financial stress they may have since financial stress does play a role in productivity at work.
In Illinois, it is illegal to use a credit check as part of your background check with the exception of some industries, like banking or professionally licensed roles. Additionally, some employers will use the laws in the state where they are headquartered to get around state laws addressing credit checks during the background check process for new employees.
Whether your profession is subject to a credit check during the employment process or not, it's important to understand your debt and what has been reported to the credit bureaus.
Annualcreditreport.com is the only place you can go to get all 3 of your credit reports from the credit bureaus for free. You can pull the reports from Equifax, Experian & TransUnion for free once every 12 months. You want to make sure that the data in these reports are accurate so that anyone reviewing the information has the correct information, be it a potential employer or a credit scoring company (of which there are several).
You can learn more about credit and its role in your life by watching our recorded webinar, Credit Reports, Scores & Histories: Credit Secrets Revealed.
Additional resources for managing credit & credit cards include nerdwallet & feedthepig.
It's easy to avoid student loans, but it is important when developing your debt repayment plan to move past the myth mindset of "A grace period means I don't have to think about this yet."
When it comes to student loans, there are several questions you want to ask yourself, including:
- How much do I owe?
- What types of loans do I have?
- Who are my loan servicers?
- When is my first/monthly payment due?
- Do I have the money for the first payment?
- Does my new job qualify for loan forgiveness?
- How do my student loans influence my budget?
You can watch our recorded webinar, Love Your Loan: Student Loan Repayment, addressing things like federal student loan repayment plans, Public Service Loan Forgiveness and more. Plus, you can use some of these free resources for helping you assess your student loan debt & repayment options:
Other Types of Debt
There are several other forms of debt besides student loans that should be addressed, including if you have a mortgage, any medical debt, credit cards, personal loans, or any debts owed to friends and family.
There may be other debts that you personally hold not mentioned above as well.
Top Tips for Addressing Debt
Be proactive. Listing all of your debts in a single place can feel overwhelming, but it is the best way to strategize how to minimize your debt.
Personalize. Realize what resources you have available to address your debt and create a plan that helps you stay motivated.
Prioritize. There are two main ways to prioiritize paying down debt: the debt snowball and the debt avalanche. You also may make it a higher priority to pay down debt than to accomplish other goals, like home ownership or travel.
By taking a debt snowball approach to addressing debt, you'll be prioritizing the lowest balance debts first. By taking a debt avalanche approach to addressing debt, you will be prioritizing paying off the debts with the highest interest rate first.
You can use powerpay.org to develop your own debt payoff plan.
Determine the personal value of income (money) versus benefits (and perks) of a job from a five-year perspective.
To combat the myth mindset "I am not worried about what health benefits I get. I never get sick." and estimate the value that benefits offer, we must think about benefits from a five year perspective.
More than 25% of today's 20-year-olds will become disabled before they retire. - DisabilityCanHappen.org
Consider how benefits can help you accomplish your health and wealth goals in the next five years.
Are you planning on getting married or having children? What types of doctors will you visit? These questions can impact your choices on healthcare benefits provided through an employer.
Take advantage of the Time Value of Money and start putting money into your 401k or (403b) right away. When it comes to retirement & investing, the time value of money allows you to save less overall by starting early compared to waiting to start saving.
Are there other investment opportunities offered by your employer that you can use to accomplish your goals? You can use Ballpark E$timate to see what you may need to save for retirement.
Additionally, you may want to ask:
- Does the potential employer offer a match for retirement contributions?
- How long do you have to work to be vested (aka eligible for those additional contributions)?
- When are you eligible to participate in retirement options?
- What types of savings vehicles does your employer offer?
Saving for retirement can seem daunting, but this Life Hacks for Millennials blog post makes it a little easier to approach.
Watch our recorded webinar, What's Your Job Worth?, for more on what benefits an employer might offer and how much they’re worth.
International students searching for a job in the United States may need to ask about employer sponsorship or consider their visa status during their job search as well.
It's important to note that sponsorship is not always guaranteed so you should know the limitations and legal requirements of working in the United States as a foreign national.
You can learn more about employment as an international student or Optional Practical Training by contacting your campus' international student services office or through the Department of Homeland Security.
Know how negotiation could play a role in compensation conversations.
As you might have guessed by our focus on the value of benefits, we want to overcome the myth mindset that "Larger salary is more important than the value of benefits."
Flexibility in a benefits package may pay off more than a larger salary. For example, giving up money for a more flexible schedule or etter health benefits may be more valuable to you in the long run.
Would you give up some money if you had flexible work hours, late starts or freedom to leave and pick up kids from daycare or school?
Determine what is best for your right now and in the next 5 years to prioritize what benefits and perks of a job are more valuable to you and/or your family and approach salary negotiation from that perspective.
Research - Ask - Revisit
Consider the average salary based on the location, job title and your experience. To research salary, you can use tools like the Bureau of Labor Statistics (BLS), O*NET OnLine, PayScale.com, Salary.com and even FeedThePig.org for more on salary negotiation and leveraging benefits to better meet your goals.
Back and forth conversations can lead to results, so don't be afraid to ask. If you are very uncomfortable with asking, you can revisit later, during a performance evaluation or you can ask for a 6 month review instead of a 12 month review.
Prepare a personalized checklist of concepts to consider and questions to ask in preparation for a first (or new) profession.
If your budget is tight, your checklist may include a plan to increase income or reduce expenses. To increase your income, you may want to consider a side gig, selling stuff you no longer need or bartering your skills with others. If you are looking at decreasing income, you may consider a housing change, like downsizing or relocating once your contract is up; a transportation change like carpooling, using the bus or riding the train; or, as a last result, considering a loan deferral or replayment plan change for things like student loans.
Possible topics in your checklist may include:
- Professional appearance
- Relocation expenses
- Daily work day expenses: Commute & Work day meals
- New job budget basics
- Address existing debt
- Determine needs, wants & goals
Don't forget about the worksheet that North Park University created to help you get started addressing financial wellness with your first profession.
This is an Earning Badge Eligible Program.