Monday, 24 August 2020

Just when you think you're ready to pursue the path you've dedicated four years to studying, life may take a turn.

Financial challenges and setbacks, especially early in your career, can become disheartening. Lining up your resources with a back-up plan can give you the flexibility to pursue your dreams with confidence.

Create a safety net

For starters, try to set aside money in an emergency fund until you can cover at least three to six months of your essential living expenses. When you dip into the fund, be sure to replenish it as soon as you are financially able, such as when you get a raise.

Insurance can be another essential way to plan for financial emergencies. Renter's insurance, for example, can be a relatively affordable way to address losses from damage or theft that your landlord's insurance doesn't cover. That would include replacing your personal belongings if stolen, or covering temporary living expenses in the event your apartment suddenly becomes uninhabitable. It may also provide coverage for an accident or injury at your residence.

Health insurance payments, in contrast, may not appear so affordable when you are already spending so much on housing, student loans, etc. However, even if you are relatively healthy now, a sudden illness or accidental injury may be expensive to treat. Unpaid or late medical bills could also possibly affect your credit.

If you cannot get health insurance through your employer, you may be eligible for coverage under your parent or legal guardian's policy (until you're 26) or through a subsidized policy of your own from the Healthcare Marketplace (Affordable Care Act).

Typically, choosing a plan with high-deductibles (the amount of money you must pay before your insurance company will pay a claim) may lower your monthly premiums. However, you'll want to plan to have access to enough money to cover the deductible amount should you need to file a claim.

When your job situation is going well, think strategically about how you use your free time. Consider taking advantage of employer offers to pay for certification or professional training that can boost your value in the job market. Can you spare a few hours a week to grow a second income stream with a side hustle that you are passionate about? The money you make can help you pay off debt faster and increase your savings.

Assemble your support team

Support systems are critical to managing your financial life. You may want to let your family and close friends know that cash might be more helpful to you right now, instead of other gift items. Not everyone, understandably, has the option of tapping into their personal networks for financial gifts or loans. Other support, such as insider references for a job or an affordable apartment, can be priceless.

A financial mentor—someone in your life who you can trust to discuss your finances—can help you get financially and emotionally prepared to navigate the basics of adult financial responsibility. Once you start your job, consider also working with a financial planner to get professional guidance for an early start on retirement and investing. Cultivate your networks and remember to pay it forward by offering your help to others as appropriate.

Keep more money in your pocket with negotiation

Negotiating can pay off financially in everything from job compensation to rent and car buying. The worst-case scenario in negotiating is not that someone will say no, but rather learning too late that they might have said “yes" if only you had asked.

When negotiating anything, do your homework before you make a counteroffer. Also, understand what leverage you bring to the discussion and be prepared to showcase your value.

Avoid being underpaid, starting with your first job. Keep in mind that your negotiation goal is to ensure you are being offered a fair, competitive salary. Once you begin your new job, learn to document your job projects and achievements. Keep track of who praised you or worked well with you, including colleagues and clients; save such emails to a personal folder, for instance. This process can give you more confidence and ammunition for that annual raise conversation or interview for a new job.

Housing payments are probably your largest monthly bill, so think about negotiating that, too. A $50 per month reduction on a new lease can add up to hundreds over the course of a year. Talk to your landlord about a few months of reduced payments in exchange for a smaller deposit returned at the end of the lease. Many landlords would rather have a steady income than none at all, especially if the economy is taking a downturn. You're also likely to fare better negotiating a lease if you have a solid rental history, good credit or a larger deposit.

If you're facing a layoff or other financial challenge, don't be afraid to reach out to your bank, credit card, loan provider or other creditors, especially if you have been a good customer. Fees may be waived, rates may be reduced and possibly payment arrangements can be made with a polite and honest conversation. This tactic can go a long way toward preventing the stressful pile-up of late payments and penalty fees, and even help salvage your credit score.

Uncertainty is a part of life

There is so much pressure to make the right first steps after we get our diplomas that it's easy to forget that some things are out of our control. Brilliant career plans can be disturbed by factors such as a job that doesn't fit us, changes in the economy or even a force of nature. The most we can do is try to enable our resilience with preparation and patience.


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