From navigating post-college employment to dealing with student debt, the millennial generation faces many financial challenges. What steps can a young professional take to help ensure his or her financial security?
Best-selling author and senior advisor to the Pew Charitable Trusts and former FDIC Chair Sheila Bair advises those just starting out to be realistic. "They need to be flexible in this job market but work hard and do a good job in whatever that first position may be, and it will lead to better opportunities later on," she said.
Here are a few tips Bair believes will help young adults attain financial security.
Take advantage of company benefits. In getting that first paycheck, a lot of young people are wondering how to manage their money. Bair advises, first and foremost, to participate in an employer's 401(k) if it is offered. The tax advantage with an employer match is very important, she noted.
Enroll in direct deposit and automatic savings plans. Also, set up a direct deposit for your paychecks. Most banks now offer automatic savings, so when your check is deposited in your checking account, a set amount of funds can be automatically allocated to a savings account, which would be off limits and out of sight so it can keep growing, Bair said.
Watch out for fees and overdraft protection. Bair warns of the importance of staying on top of accounts, explaining the need to ask a lot of questions about fees. "Unfortunately, fees on both checking and savings accounts are not as transparent as they should be," she said. And finally, stay away from overdraft protection. "It has tripped up far too many people. … Only spend what you have."
Disclosure: Sheila Bair is on the board of Banco Santander SA, one of Europe's largest lenders.
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