You've Earned It!
After completing the courses in this section, download your Mercer BenefitsU diploma to recognize your educational achievement.
Once the caps and gowns are put away, recent college graduates enter a new era of practical learning. Call it 'Real Life 101.'
Master the lessons here and you can end up fiscally fit for the rest of your life. The repercussions of anything less, however, are painful. So, whether you graduated last month or years ago, it's time to do these 10 simple things to get your financial life on track.
Gather student loan data. If you're like most students, you took out a passel of loans to get through college. According to a recent report by the Institute for College Access and Success, 69% of graduating seniors borrowed an average of $28,950. Since your goal in school was to pass your courses, not track your loans, you may not be completely clear about how much you owe to whom. Never fear: The federal government makes it easy to find your lenders, providing a one-stop repository for information about federal student loans at nslds.ed.gov. You can find information about private loans at annualcreditreport.com. (Request a free copy of your credit report; lenders and loan amounts are listed on it.) Since the first payments are due six months following graduation, there’s no time to delay.
Pick a repayment plan. There is a wide array of repayment options for federal student loans, including structuring the payment as a percentage of your disposable income. Though paying off most debt as fast as you can is smart, don't be afraid to pick one of the stretched-out repayment options here. Why? The penalty for defaulting on a student loan is steep, and no one gives you credit for picking the tougher repayment choice if you can't handle it. Stretching payments over a longer time will keep your monthly obligation relatively low and, presumably, easily manageable. That's important, because your student loans will form the cornerstone of your credit history, and that history will be used to determine your loan rates for years. The better your payment history, the lower your rates.
Incidentally, if you can sometimes (or always) afford to pay more than the required payment, go ahead. There's no penalty for paying too fast. Just be sure to tell your lender that any extra amount should go to retiring principal. Who knows? You could pay off the loan faster than the toughest repayment plan. But choosing stretched-out repayment gives you more options and the ability to aggressively attack more costly debts.
Pay off private loans and credit cards. Speaking of those more costly debts, if you have private student loans and credit card debt, pay those off as quickly as you can. Private student loans are generally variable-rate loans, so when market interest rates rise, so will the cost of these loans. Private loans also have few of the borrower protections — like the right to put payments on hiatus if you go back to school or lose your job — that make federal student loans so flexible. So paying off private loans should be a priority. But if you have credit card loans, you're already paying an exorbitant price to remain in debt. Make paying off the credit cards priority one and the private student loans priority two.
Make a budget. Once you know how much of your monthly income will be consumed by loan payments, you can determine what's left for the rest of the things you want and need. Although a lot of people dread the notion of creating a budget, it's really a way of knowing whether you are spending on things that are valuable to you. Why wouldn’t you want to be aware? We all get into habits — stopping at Starbucks on the way to work or heading to the bars afterward — that seem like spending pocket change without ever bothering to add them up. Writing down how much you're spending on different items helps identify these spending patterns.
This isn't about dictating penury. You're an adult now, so nobody gets to tell you what you can and can't do. You love going out to dinner and can afford the $500 a month it costs you? Follow the yearbook advice and "never change." But if your bar, lunch or pedicure bills turn out to be far more than you ever imagined or more than you can afford, the budget tells you where you can cut without too much personal sacrifice. To get started, find an online budget worksheet, like the one at Kiplinger.com, and gather several bank and credit card statements to fill in the blanks. To estimate the average cost of irregular expenses, like those bar tabs, look at several months of spending. Don't forget to allow for income taxes, expenses such as insurance and, of course, savings.
Plan for upsets. Financial planners say you should have six months to one year of living expenses in a bank account for emergencies. If you're fresh out of school and your parents haven't turned your old room into a rental, you probably don't need that much. But you do need at least enough to cover common economic upsets like a major car repair or an uninsured dental bill. And, eventually, you'll want an emergency fund that doesn't require you to run back to Mom and Dad if you get laid off. Put the emergency savings on automatic pilot by setting up a regular debit from your checking account. Even small regular contributions can build up and save you from economic disaster later on.
Contribute to a 401(k). You may think that you can delay saving for retirement for a few years — after all, you're young and retirement is decades away. But if your company provides a 401(k) "match," you'd be crazy to pass it up. Retirement matching programs, common among big companies, typically kick in between 25¢ and $1 for every dollar you contribute. Thus, if you put $6,000 annually into the plan ($500 a month), your company will match that with, say, $3,000, or $250 per month. If you don't contribute, the company doesn't either, and you lose that $3,000 forever.
Moreover, contributions come out of your pay before taxes are computed, which makes them easier on your pocketbook. Assuming that 25% of your pay goes to federal and state income taxes, for example, a $500 monthly contribution reduces your paycheck by just $400. Yet your savings, after the match, grow by $750.
Shack up. You say you can't possibly afford to pay down your debts, get an apartment, and contribute to the emergency fund and 401(k) all at the same time? Consider shacking up with Mom and Dad (assuming, of course, that they'll let you). Even a few months of rent-free living can allow you to pay down your debts and get your savings started. When your paycheck is bigger or your debt is smaller, you'll have more discretionary income and be in a better position to pay rent. If your parents are not willing, keep your apartment expenses modest by living like you did in the dorms — with as many roommates as the house allows.
Learn investing basics. In eras gone by, workers could expect their employers and the federal government to provide most of their needed retirement income through Social Security and pensions. You probably don't have that luxury. Many company pensions have gone the way of the dinosaurs, and Social Security deficits are likely to make changes necessary by the time you're ready to collect. Your long-term economic security is going to depend on how much you save and how well you invest it. So start educating yourself about investment options. They're not difficult.
The thumbnail is this: Stocks are for growth; bonds are for income; cash is for security. So, for now, put your emergency fund in a bank account. (That's considered cash because your money is easily accessible.) Put the money you're saving for near-term goals, such as buying a car, in bonds or certificates of deposit that "mature" (pay off) when you think you'll need the money. And put your retirement account in a broad-based stock market index fund. Then consider buying or borrowing a good investing primer, such as John Bogle's The Little Book of Common Sense Investing.
Pay attention to benefits. In addition to the 401(k), many companies offer a package of other benefits that can range from subsidized health insurance to day care for the kids and commuter benefits to defray your transportation costs. The more benefits your company offers, the bigger the benefits manual — and the more likely you're going to toss it on the coffee table and consider it a bulky coaster. Instead, crack that book and attend the benefit meetings. They can pave the way to thousands of dollars in savings each year, which covers a lot of bar tabs.
Insure what you can't afford to lose. Speaking of benefits, pay particular attention to disability and, potentially, life insurance offers from your employer. Disability insurance protects you from losing all of your income if you find yourself injured and unable to work. The chance is small, but if you'd be economically devastated without your paycheck, the premium may be a small price to pay.
Meanwhile, if you are married or have small children who depend on you for support, you'll also need life insurance to protect their financial welfare if anything happens to you. The good news about this is that your chance of dying is minuscule, so the premiums for a term life policy are small too. That said, if no one relies on you for financial support, you don't need the coverage. If your employer provides some coverage for free, take it, of course. But pay for life insurance only if you need it.
This content was created for Mercer by The Foundry at Time Inc., March 2016
Tips for slimming your budget
Committed to a slimmed-down budget? Don’t stop at clipping coupons. Take your personal savings further with these outside-the-box strategies.
Putting the brakes on unnecessary spending sounds like an obvious way to conserve cash — but it’s not easy. That evening out with your best pals feels so necessary at the end of a long week. But freezing your nonessential funds might be more doable than you think. The key to success? Having clear rules to keep you on track until you reach your goal — and possibly kick-start longer-term saving habits. Here’s how to make it work.
Review your most recent credit card statements and checking account activity. On a sheet of paper, create two columns: Needs and Wants. Needs are essentials such as gas and utilities. Wants — the half-off sneakers, a burrito at the food court, extra groceries for a dinner party — will have to be put on hold for the duration of your fast. Categorize your expenses into one or the other.
Seeing a light at the end of the tunnel makes following a financial diet easier. Start by scrimping for a weekend, then a full week. Eventually try cutting back for an entire month.
Pair up with a buddy and encourage each other along the way. Ask other friends to refrain from inviting you to pricey outings. But don’t ditch your social life entirely: Organize a potluck-style dinner, or gather friends for a morning walk to catch up.
Challenge your children to a competition. Encourage each to come up with the most ideas for fun, free family activities; offer the winner a no-cost prize, like serving his or her favorite meal for dinner or a break from chores. And be sure to post plenty of visual reminders of your final goal — say, the dollar amount of savings you hope to pile up, which you can update along the way, or a photo of your dream vacation spot — to keep your family motivated and excited.
Save these trimmings in a covered container in the fridge and use them to make soup stock so you won’t have to shell out for a boxed version.
Instead of getting rid of outfits that your kids have outgrown, recycle them. Thredup.com, a free clothing-swap site, will send you a bag to fill with gently used garments. Just call USPS or UPS and ask to have it picked up and shipped to thredUP for free. In exchange, the site will evaluate your goods and give you credit to restock your kids’ closets with the new-to-you clothes on the site. Or, you can opt to receive cash via PayPal.
On average, consumers buy 60% more than they planned every time they shop for groceries. The solution? Shop less to spend less. Make it possible by freezing meals that you prepare in advance. That way, you can lock in savings for the entire month. (Plus, ready-made meals quash the costly temptation to hit a drive-through.) Here are ways to get cooking and start saving.
Sit down with your supermarket sales circular, pull out your family calendar and plan one month’s worth of meals based on what’s on sale. (If you’re new to meal planning, start with a week and gradually build up to 30 days.) Be sure to mark down evenings when you’ll want to eat leftovers, since those nights will affect your cooking plans. The more you double recipes (consider which are family favorites or inexpensive to make), the more leftover nights you can have on your schedule.
It’s no surprise that using credit cards can cost you. The habit of swiping plastic can lead to impulse purchases and mindless spending. So take a tip from an older generation and stick to cash. Keep your money in a place you can see it — such as an envelope — to curb overspending.
Write down all your expenses and see which ones you can pay for with cash. Create a designated envelope for each, then decide how much money you can put toward the different categories.
Withdraw the total amount of money you’ll need in cash from a no-cost ATM, and slip the designated amounts into the appropriate envelopes. Use only the cash in each envelope to pay for your earmarked expenses that month. If you come in under budget in one area, you may reallocate the funds to another envelope if necessary. Seeing the cash dwindle prompts you to maintain more control over how you spend — or save.
There are, of course, expenses that you cannot pay for in cash, like your mortgage and credit card bills. Keep a running tab of those payments on a sheet of paper near your envelopes. A visual reminder helps keep those payments at the top of your agenda.
Mercer HR Services, LLC and Mercer Trust Company do not provide investment, legal or other advice and are not responsible for the opinions contained in this article. This article represents the opinions of the author and not those of Mercer HR Services, LLC or Mercer Trust Company.
© 2015 Time Inc. All rights reserved.
Applying poor social media judgment may limit your professional success.
In college, you may not have thought twice about using social media to share how excited you were to get in a great day of skiing (even though it meant missing class) or post about a late night on the town. But do that after you’ve joined the work force and the repercussions could be dire. And that’s not the only social media misstep that could haunt you, if you’re not careful about how you handle your digital life.
No one knows exactly how many employees have been demoted, fired, passed over for promotions or simply not hired because of something they posted on a social media site. But anecdotal evidence abounds. And as these sites gain stature and increasingly mature audiences, the risks are soaring.
Not surprisingly, employment experts contend that transitioning from college to the working world now requires rethinking your virtual life as well as your real one. What should you do to turn your digital profile professional?
Get an Outside Opinion
Find an adult you trust — ideally one that’s hired a few people — to go over your social media accounts. Is the image you project on social media the one you want to define your career? If not, discuss what changes might be advisable. This doesn’t mean you have to replace every casual photo with one of you in a suit. But it may require being more thoughtful about the topics you weigh in on and the photos you share.
Clean and Scrub
If your account history is riddled with party pictures, profanity and taboo topics, consider scrubbing those messages and images from your public profile. If your friends have tagged you in compromising shots, un-tag yourself and ask your friends to use some discretion in the future so they don’t inadvertently share a memory that you’d rather keep under wraps. It would be wise to scrub your profile of inappropriate "likes" and favorites, too.
When you post on social media sites, you should realize that through additional sharing by your friends to their friends and friends of their friends, your words could be seen by coworkers, your boss, or even clients. Consider whether your comment could make you seem less than professional — or perhaps downright insensitive. Be especially mindful of irreverent commentary about work-related topics — like making fun of a coworker’s holiday party antics or complaining about a difficult client. Bottom line: Think before you type. Likewise, resist the temptation to use social media at work unless doing so is part of your job. Posting personal photos, playing games and otherwise having an active social media presence while on the job can well be considered slacking.
Know the Limitations of Privacy
You should set privacy controls on all of your social media accounts, but also know that privacy settings only deter casual lurkers. Any sophisticated snoop can get around them. What about sites that promise to delete your messages within seconds? Recipients can still take a screen shot and save or share that message. If you wouldn’t feel comfortable to have your message shown publicly, it shouldn’t be shared on any social media forum no matter how strict your privacy settings. The simple rule is this: if you want to keep something private, don’t post it.
This content was created for Mercer by The Foundry at Time Inc., April 2016.
When it comes to balancing one’s personal and professional life, working parents face the added challenge of attending to their children’s needs while also meeting their occupational obligations. In fact, 56% of working moms and 50% of working dads say they find it difficult to balance the responsibilities of work and family.1
Beyond finding enough time to spend with their family, parents of younger children also must figure out how to ensure their children are well-cared-for during the workday. And this is no easy task — 62% of parents with one or more children under age 6 say it is hard to find affordable, high-quality child care.2
Child care is a growing issue for American workers. Today, all parents in six out of every 10 households with children work out of the house, compared to only four out of every 10 households with children in 1965.3 At the same time, child care costs have steadily increased over the past 25 years.3
If you’re struggling to find a child care option that meets your family’s needs while also fitting your budget, here are some tips to help you.
Above all, make sure you check references before hiring a caregiver to be sure you feel confident in your decision. The less you worry about your children while at work, the more focused, productive, and successful you can be on the job.
1Pew Research Center, 2012
2Pew Research Center, 2015
3"Nine Facts About American Families and Work," The Council of Economic Advisers, 2014
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