I have one semester left at UT, and it is slowly starting to hit me that I am just about all grown-up. With this realization comes another: I know next to nothing about anything dealing with money. It appears with my major (Civil Engineering) that I will be able to find a job, and I will have no credit card debt or loans to pay off. Does anyone have any good advice so that I will be able to start off on the right foot? I'm not one to go blow money on stupid things, but I have no idea what to invest in or how to best place my money. Any sort of advice (whether it be personal experiences or even a good book to read on the topic) would be greatly appreciated.
You're in great shape already with no cc debt/loans. I would advise you to read Dave Ramsey's "Total Money Makeover" and follow his seven baby steps to financial peace. This is geared toward people in debt already, but you can basically skip to step 3 or 4. Just create a simple budget and send every dollar earned to a specific spot- even if it is just your savings account. It really is simple- don't spend more than you earn. My personal advice to go along with this is not to go out and buy anything right away that you can't afford without financing. I had student loan debt, and went out and bought a new car just before I graduated. I needed one, but now I wish I would've bought a 2 or 3 year old used car and saved thousands of dollars. I will never buy another new car again unless I am flat out able to save the money and pay cash for it. Whenever you start looking to buy a house, I believe DR says not to buy unless the monthly payment is no more than 25% of your take-home pay on a 15-year mortgage.
Try to save up 6 months worth of living expenses in a liquid account (money market) that has a decent yield that you can use in case you get laid off. That's your emergency fund and you should TRY not to touch if at all possible. On kind of the same note, start saving up for a down payment on a house as soon as you can. Sooner or later you're going to realize paying rent is the equivalent of NOT owning bits and pieces of your own home. The sooner you save up enough for a down payment on your 1st house, the happier you'll be (in my experience anyway). Contribute at LEAST as much as your potential employer will match on the 401(k) or similar retirement plan. If they will match up to 5%, you DEFINITELY need to contribute 5%. That's free money, holmes. After that, a Roth IRA is generally considered a good vehicle to throw the rest into for a "hands-off" investor. I'd advise AGAINST getting a financial planner until you actually have some assets to manage. Otherwise the fees and expenses could impact any negligible increased yields. Just find a good investment book for dummies and you'll be fine for awhile. When you go in and actually make your investment choices, be willing to take some risk. I'm 29 and I'm 50% international, 25% small cap, 25% large cap. That's fine for me because I'll probably be working another 35 years. You have to be willing to withstand the downturns, because they will happen. Just remember that the market tends to run in cycles and that things should rebound eventually. The last thing you want to do is have a risky composition (such as mine) when the market crashes and then abandon it for fixed income. The risky investments have a great probability for rebounding. As you get closer to retirement and want more stable, fixed income you can go into safer things like CD's, agency bonds, etc. But while you're young, take calculated risks that you're comfortable with. Just my $0.02...Good luck.
this plus contribute more than the matching % upto the maximum allowable if you can. also make sure the diversify/spread your investments across. buy a pre-owned car which still has factory warranty and extra will be better
Not to mention your company retirement (for me, anyway) somehow subsidizes the fees a bit, so it ends up being a better deal anyway. Good call.
