Life Stages: First Job

Joshua Nowack

October 3, 2014

Congratulations! You are a newly minted college graduate! The world is your oyster. You are finally earning above minimum wage. Dare I say you are finally earning money and now you’re financially independent.

Okay, let’s not get crazy. You might not be financially independent. But before you start spending yourself to oblivion, let’s go over basic considerations.

Student loans – Yep, the interest is tax deductible! Yes, there are options to defer student loans through a variety of programs. If you are unemployed, not making enough cash to repay or are going back to school, you have your options on repayment. Ideally though, you are making payments to getting this monkey off your back.

401(k) – Now is a great time to establish a savings plan. A 401(k) plan allows you to set aside a portion of your wages for when you’re old and gray. Heck, even 3% is a good start. You get a deduction for that contribution and you’re starting to take fiscal responsibility for yourself.

New stuff – yes, if you’re driving a 1985 Buick Regal that’s rusted over. Yes. a new car is in order. But be mindful, there will be bigger and better things that will come along. You don’t want to be in a position that you have a nice ride, but live on someone’s couch because you can’t even afford the gas.

Housing – general housing rules are that you don’t want housing to be more than about a third of your gross income. Now, add onto this you, at some point may want to buy a house. In Orange County, with a townhouse costing close to $350,000 – $400,000, even a 5% down payment could run you $20,000 before acquiring your furnishings.

Savings – seeing a theme here? You are going to try and repay student loans and save up some nickels. If marriage is in the future, so is a house (potentially) and children – gulp. Sorry, that’s an eight letter word. Let’s forget about that stuff.

Estate planning – well, probably don’t need to spend a lot of time on this. But, without getting too crazy, for most folks, at a minimum, just make sure that someone else has access to your bank accounts. You probably don’t need a super dee duper estate plan here so a DIY solution should be fine here, but something that says who can take over your stuff if you can’t. The odds of this happening are really low, but if they do, give your family and friends some help here.

Tax returns – If you haven’t filed a tax return yet, well then now you will. Joy. Could you do it by yourself through one of those software solutions or retail places? Sure. You could likely even use a free file service. You need to assess the value proposition of doing it yourself versus getting some support. The most important thing is that you file. If you want help though, call us.

   

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