By Carolyn Bigda
WWR Article Summary (Tl;dr) Women and Money, it’s not only the young who are concerned about their financial well-being. Plenty of women in their 30’s and 40’s can also use the advice of Carolyn Bigda to get debt under control and finances in order. As Carolyn suggests…. “every dollar counts and is counted”
When I was in my early 20s, I was living in a mouse-infested apartment and counting every penny.
If you’re young and in a similar situation, let me tell you from experience: There’s hope! Your diet, one day, will include more than ramen noodle packs and you won’t have to snuggle up with a mouse at night.
But a better financial future takes effort and good advice.
Be realistic about student loans: Many students need to borrow money in order to pay for college. But Mark Kantrowitz, a student loan expert, said it’s imperative to keep that debt “in sync” with your potential income.
“Education debt may be good debt because it is an investment in your future, but too much of a good thing can hurt you,” he said.
His suggestion: Keep your total student loan debt to less than your projected annual salary after graduation. (You can find a number of salary estimator tools online.) Do so, and you will be able to repay your student loans in 10 years or less, Kantrowitz said.
If you borrow more, you’ll likely need an alternative repayment plan after college in order to afford your monthly student-loan bill.
“These plans reduce the monthly payment by stretching out the loan term, and that means you might still be repaying your student loans when your children enroll in college,” he said.
Think about your career early: You don’t have to decide on a career as a freshman, but it’s a good idea to start exploring the possibilities early, said Philip Gardner, director of the Collegiate Employment Research Institute at Michigan State University.
“Professional and academic development are now tightly intertwined,” he said. “So the transition into the workplace begins on day one in college.”
If you put off job-search steps, such as doing internships, attending career fairs and networking, getting work after graduation will be much more difficult.
Respect the dollar: You don’t have to be a miser like Ebenezer Scrooge, but you will work hard for the money you earn. Keeping tabs on how you spend those dollars will help you make the most of them, said Bonnie Sewell, a financial planner in Leesburg, Va.
“Every dollar counts and is counted,” she said.
Be disciplined: Saving, it is one of the most important things you can do when you’re young. By starting early and doing it regularly, you will form a habit that serves you for a lifetime.
You will also take advantage of compound interest. And to make the most of it, “You want to minimize expenses and emotions and maximize diversification and discipline,” said Allan Roth, a financial planner in Colorado Springs, Colo.
He explained: “Expenses take from returns and our emotions make us buy high and sell low. Diversification helps us own everything rather than buying what’s ‘hot,’ and discipline makes us rebalance to buy stocks when the market is down and sell when it’s up.”
Don’t fear risk: Speaking of up-and-down markets, William Bernstein, an investment adviser and author of several investing books, including, “If You Can: How Millennials Can Get Rich Slowly,” said young investors should not dread market losses.
“Twenty-somethings should get down on their knees and pray for a long brutal bear market. They should ardently embrace risk so that they can acquire stocks cheaply,” he said. Because when those stocks rise, you’ll be far richer than if you had bought at higher prices.
Young people have plenty of working years and time in front of them. “For the youngster, stocks are not all that risky,” he said.
ABOUT THE WRITER
Carolyn Bigda writes Getting Started for the Chicago Tribune