Division of Securities highlights important saving strategies for new college graduates
As thousands of Ohioans graduate from college this spring, experts with the Ohio Department of Commerce Division of Securities say, aside from securing a job, the first thing they should do is start investing.
In today's rapidly evolving economic climate, understanding the importance of saving and investing early in one's career can make a significant difference in their financial future. By utilizing smart financial strategies immediately upon launching their career, young professionals can help to ensure they have a comfortable retirement and prepare for unforeseen expenses.
A recent survey from Bankrate found that more than half of Americans (56 percent) in the current workforce feel they are behind in their retirement savings. Considering the uncertainty surrounding the future of social security, getting an early start on financial planning can help to ensure today’s young professionals have their bases covered.
“It's never too early to start saving and thinking about investing for your future,” said Ohio Securities Commissioner Andrea Seidt. “Many new graduates are thrilled to have a full-time job and may be tempted to spend on luxuries like fancy cars or upscale apartments. While it's okay to enjoy these perks, it's crucial to adopt good financial habits early on.”
The Division of Securities shares the following tips to help Ohio’s young professionals make informed decisions as they launch their careers and begin their financial journey.
Save at Least 10 Percent of Take-Home Pay for Retirement
• Starting early allows you to take advantage of tax benefits and compound interest.
• Aim to save in a retirement account like a 401(k) or IRA to avoid paying taxes upfront on these savings.
• Maximize employer-provided retirement accounts and matching contributions.
Build an Emergency Fund
• Set aside six months' worth of salary as a personal rainy-day fund in case of emergency expenses.
Live Within Your Means
• Evaluate individual purchases to determine if they are the best use of your income.
• Prioritize essential expenses like rent, utilities and emergency savings before splurging on non-essentials.
Diversify Your Investments
• Explore low-cost, diversified funds such as exchange-traded funds (ETFs) and mutual funds.
• Robo-advisers and other low-fee platforms are cost-effective ways to build and balance portfolios.
Be Cautious with High-Risk Investments
• While investing in areas such as cryptocurrency may be exciting, it is important to fully understand the risks involved.
• Seek advice from trusted family members or financial advisors before making significant investments in high-risk products.
“Good financial hygiene, such as saving right out of school and consistently setting aside a portion of your income, ensures you won't miss it later,” Seidt said. “By the time you reach retirement age, these efforts will pay off, allowing you to have a comfortable retirement without financial worries.”
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