Empowering Young People with Financial Literacy
I started out in the Financial Services Industry as a young college intern at a big brokerage house back in the late 80’s. My job entailed answering phones and cold calling for brokers who sat at their desks with their feet up, smoking cigars. It was most definitely a male dominated industry. Learning about the stock market and investments can be overwhelming for anyone but can be especially intimidating when you are a young woman. For a young adult, starting out in the workforce can bring all sorts of daunting tasks... ranging from getting off a parent’s medical insurance, to figuring out how to start paying off student loan debt. Just figuring out how to get your own credit card and signing a lease can be puzzling.
One important piece of advice that I heard early on in my career was pay yourself first. If you are at a company that provides a matched contribution to your 401(k) or 403(b), that is essentially free money. You should be sure and contribute at least that much. Add to that the time value of money and the compounding of interest, and you will be well on your way to creating a nest egg.
If you are not at a company that offers a retirement savings plan for their employees, then even just having a portion of your paycheck automatically transferred from your checking account to a savings account can create a “forced” savings plan. What you don’t see, you won’t be tempted to spend. Even further, that amount can be transferred to an “IRA” or Individual Retirement Account or Roth IRA and the earnings can grow tax deferred or tax-free.
Current contribution amounts for 2020 for anyone under 50 is $6,000 and if you are 50 or over then an additional $1,000 can be contributed. There are income limits on who can contribute to these investment accounts. Financial plans and budgets are all items that can make one feel empowered about one’s finances and can offer a sense of control and being in the driver’s seat. Nothing feels better than feeling organized and having a clear idea of where you are headed. In 2020, decide to take control of your finances and life. Small, simple changes can create great rewards.