5 smart financial tips for young people
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[October 14, 2013]
CHICAGO -- A whopping 70 percent
of college students will graduate with student loan debt, which
averages about $25,200, according to a recent Fidelity Investments
survey. This is one of the many sobering realities for young people
just beginning higher education or moving out into their first job,
and one of the reasons why it's such a good idea to get a firm grip
on money management basics. The Illinois CPA Society lays out five
important financial facts and what they mean for students and recent
1. There are good reasons to go to college.
evidence that a college degree increases earnings. People with a
bachelor's degree earn 84 percent more over a lifetime than those
who have only a high school diploma, according to a Georgetown
University study. The median lifetime earnings for those with a
bachelor's degree is $2.3 million, compared with $1.3 million for
people with only a high school education. If you're uncertain about
whether to plunge into college now or put it off until later in
life, remember that it could be tougher to go back once you're
working or have family responsibilities.
2. There are smart ways to cut college costs.
Want to know one great way to graduate from a top-notch school
without taking away a heavy debt burden along with your diploma?
Begin your studies at a community college, then transfer to a
four-year college later. Tuition at community colleges is generally
less expensive, so this is a cost-conscious way to build credits
toward a bachelor's degree and still receive a diploma from a
four-year school. Just be sure that the college you'd like to
transfer into will accept credits from the community college you
choose, and that the classes you take match the course requirements
for a degree at the four-year school.
3. Start saving now.
You're thinking there's plenty of time for that later, right?
Well, the beauty of saving early and often is that it makes it
possible to build up a very impressive nest egg over time. Once you
start getting a paycheck, it will be tempting to spend every bit of
it, but give serious thought to having a portion deposited
automatically into a retirement or emergency savings account. Of
course, it can be tough to set anything aside when you're dealing
with student loans, entry-level salaries and the costs of renting or
buying and furnishing your first home. You can dial back your saving
if you have to, but don't let the challenges you face prevent you
from doing it.
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4. Be careful with credit.
If you learn how to live within your means now, it will serve you
well throughout your life. When you use a credit card to finance
your purchases, you're paying extra every time you buy because of
the interest that the credit card companies charge you. Avoid
splurging on things you can't afford, and save up for expensive
items over time. If you do use a credit card, make sure you can pay
it off in full each month to avoid hefty interest charges.
5. Keep track of what you've got.
It's difficult to make sound decisions if you don't have a firm
grasp on your current financial situation. Get into the habit now of
reconciling your checking and credit card account statements each
month so you know your account balances and understand your
spending. Make a monthly budget and compare these statements against
it to make sure your spending remains on track.
Although students and young professionals who employ these
tactics can still find managing their finances daunting, remember
that these matters don't have to be confronted alone. The Illinois
CPA Society has a free, quick and easily identifiable
directory that anyone can use to select a local CPA. CPAs help
individuals at all stages of their financial life make the best
[Text from file received from
Illinois CPA Society]
The Illinois CPA Society,
founded in 1903, is the fourth-largest state CPA group in the
nation, with more than 23,000 members. It is the premier
professional organization that represents CPAs in Illinois. For more
than a century, the society has advanced the highest ethical and
financial standards of the profession and remains a leader in
educating the public on financial issues. More on Twitter:
Money management columns are a joint effort of the American
Institute of CPAs and the Illinois CPA Society, as part of the
360 Degrees of
Financial Literacy program.