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Start out with good habits



Newly graduated? First job? It's time to set some financial goals for yourself. You don't have to have a lot of money to get financial advice from a member of The Financial Advisors Association of Canada. The financial habits you establish now will lay a good foundation for the rest of your life.

Joys of starting out:

  • low life insurance costs
  • low disability insurance costs
  • a long investment horizon
  • fewer responsibilities
  • big dreams

Student loans

If you've just graduated, you may have a student loan to pay off. With the higher cost of getting an education, those payments can eat into the meagre paycheque you get at your first job.

Don't put it off - start paying as much as you can afford. There's no predicting where you'll be five or 10 years from now, but it won't be any easier to carry a large debt around with you. A student loan may also interfere with more attractive uses for your money, like buying a car or home or starting a business.

Spending

Many people who have graduated recently are itching to start spending on some things they've never had before - like a vacation, some decent furniture or having a good time. You're only young once! But be careful with those credit cards. It's easier to spend it than to earn it.

A session with a qualified financial advisor can help you start thinking about planning your finances - not just day-to-day spending but thinking long term. These early years are a good time to buy life insurance and disability insurance as the premiums are low. See Disability Insurance a Necessity and Is Term Insurance Enough?

Some financial advisors specialize in dealing with younger customers and are more familiar with the issues you face. Shop around until you find someone you feel comfortable with. Choose a member of Advocis who can help you as you mature and have different needs.

Pay Yourself First

The most important thing a financial advisor can teach you at this point is to "pay yourself first." Use a regular withdrawal system to set aside 10 per cent of your income in an account where you cannot spend it accidently. If you do that and make the loan payment, then you can spend all the rest guilt-free.

Not many people want to think about saving for retirement in their 20s. But that savings account can get you out of a jam or become the downpayment on your first car or just mount nicely until you think of a good use for it. The discipline of saving 10 per cent will establish a habit that you can build on later in life, when you have a better job and more responsibilities.