The Finance Whisperer

Money Lessons for the College Grad

After graduating college, you enter a world of rent, loans, paychecks, and money management.  It is more important than ever to have a keen understanding of your personal finances.  A greater understanding will lead to a more fluid transition into the adult world.  In a recent article found in Forbes, Mary Morrison, Director of Funds Management at Stanford University, provides a few tips to get you started:

1. Don’t Let Salary Be the Deciding Factor for your Career Choice

Salary, although important, must be considered from all angles.  Evaluate your career goals before zeroing in on the dollar amount.  Remember that $50,000 in Los Angeles can go a lot farther in a smaller city.  Also take into consideration what is offered in terms of health insurance benefits, savings options, and overall perks.

2. Evaluate Up-Front Expenses

Moving to a new city is costly.  Figure out how much money you will need before you make the move.  Some companies issue the first paycheck up to 4 weeks after you begin and up-front expenses can include: an apartment rental deposit, rent, utilities, and overall moving costs.

3. Know Your Net Salary

Money will be deducted from your overall gross salary for items such as income taxes and insurance, leaving you with your net salary or “take-home pay.”  Make sure that you know your net salary so that you can create an accurate budget.

4. Be Practical About Your Budget

When creating your budget, consider the essentials such as transportation, insurance, food, entertainment, and an emergency fund.  Remain realistic about the costs; it’s often more than you think.

5. Know Your Paycheck Cycle

It is important to know when and how much you’ll be paid.  This will help you to pay your bills in full and on time.

6. Create an Emergency Fund

Always be prepared for the unexpected.  By setting money aside, you will be more prepared for whatever opportunity, illness, or misfortune comes your way.

7. Have a Credit Card and Debit Card

Credit cards are a great way to learn how to manage money and build your credit history.  It is also more resistant to theft than a debit card.  However, debit cards are good for common expenses such as meals out and gas. This will help you to avoid continuously swiping your credit card and unknowingly spending too much.

8. Set Up Your Savings

Begin to put money into a 401(k) or an IRA account.  By setting aside a small part of your paycheck each month, your savings will build, and lead to a more comfortable financial situation later in life.

9. Invest

You are not too young to begin investing.  Your savings account will always be affected by inflation but by investing in diversified options, the growth of invested money will be more likely to surpass inflation rates.

 

Is There Such a Thing as Putting Too Much Information in Your Resume?

In today’s competitive job market, your resume can make or break your chances of a potential interview and hire. In addition to having a resume that is clear and concise, it is important to include information that sets you apart from other job applicants. Most individuals are under the impression that the more information you include, the better. However, Business News Daily has uncovered that when it comes to your resume, there is such a thing as over sharing. Five career experts uncovered what information individuals can remove from their resumes to increase their chances of getting hired:

• Your marital status - Your marital status should have no bearing on whether or not you are capable or qualified for a position. If you include your marital status, you are opening the door to questions that may be inappropriate or even illegal.
• Political affiliations – Providing your political affiliation can bias your interviewer and can ultimately work against you. Unless you are looking for a job in which disclosing this information is relevant, it is better to withhold from including it in your resume.
• Reasons for termination – Unless there are an unusual number of short-lived job experiences on your resume, this is no need to explain reasons for separation between you and your former employer.
• A photo – Unless you are a model or actor, do not include a photo of yourself.
• Salary history – Disclosing your salary history could work against you for future salary negotiations.

Be sure that you resume is free of any information that could harm you when applying for an available job position!

Recent Graduates Struggle to Find Jobs

Despite an increase in on-campus hiring this year, less than half of graduates are expected to have a full-time job by the time they leave college.  According to a recent study by Rutgers University, only 49% of graduates from 2009 to 2011 found a full-time job within a year of graduating, compared to 73% of students who completed school from 2006-2008.  In addition, the U.S. Bureau of Labor reported that the unemployment rate for 20- to 24-year-olds was 6.4% in April of this year, compared to a total unemployment rate of 8.1%.  Experts blame four major issues for graduates’ difficulties in starting their careers:

1. The job market is still recovering—job figures for March and April both left much to be desired. 
2. There is fierce competition for jobs.  Unfortunately, the newest graduating class has to compete for spots with young men and women who graduated in the last couple years.  These individuals are still in search of entry-level jobs.
3. Today’s students have substantial loans.  Two-thirds of the class of 2010 graduated with student loans with an average debt of $25,250. 
4. Starter salaries are decreasing.  Companies are realizing they can lower starting salaries and still attract top talent. 

These four factors can make starting a career extremely challenging for recent graduates!

 

Recent College Grads: Steps to Building a Healthy Financial Future

College graduation is a time for congratulations, excitement, and…debt.  Fortunately, 2012 is seeing an uptick in the economy and hiring.  The National Association of Colleges and Employers (NACE) indicates that employers are hiring 10.2% more graduates than they did in 2011.  Landing your first job is the perfect time to start managing your finances for future prosperity.  According to Irvin G. Schorsch III, Founder and President of Pennsylvania Capital Management, there are a few steps to get you started:

1.       Always Set Aside A Portion for Savings

Postpone immediate gratification and set aside 10%-20% of every dollar you earn for savings.  Setting up an automatic deposit will help you to avoid any obstacles when depositing checks and cash.

 2.       Take Steps to Eliminate Credit Card Debt

Set an alert on your calendar to pay your bills on time each month.  This can help you to avoid the costly interest rates that credit card companies charge.  They can stack up and quickly spiral you into thousands of dollars in debt.  If you are unable to pay the full amount, at least pay the minimum each month to maintain a healthy credit rating.

 3.       Pay Off Debts with the Highest Interest Rates First

The higher the interest rate, the more you will have to pay off as it accumulates over time.  To avoid unnecessary costs, pay off the debts with the highest interest rates first.  Once done, you can then focus your attention on the debts with the lower interest rates.

 4.       Invest

After paying off your debts, you should begin to invest some of your money.  Sign up for your employer’s 401(k) or 403(b).  At many companies, the employer will match the first 4% to 6% of your contributions.  If possible, invest as much as they will match.

 5.       Get Your Credit Report

To determine your credit score and to learn where you currently stand financially, make sure to get your credit report.  By phone or Web, you can contact TransUnion, Experian, or Equifax for this information.  It will also inform you of areas you need to improve in order to increase your score.  The higher your score, the fewer obstacles you will face when working to increase your wealth.

 6.       Diversify Your Investment Portfolio

As you accumulate wealth, begin to put aside some of your savings into a diverse portfolio: cash, stocks, bonds, real estate, and commodities (i.e. natural gas and precious metals).  This will help to shield you against misfortune the next time the economy falls into a downturn or recession. 

Schorsch reminds us that paying off debt and accumulating wealth is a steady climb and not a race.  But by following these steps you will be on your way to building a healthy financial future.  Good luck!

Jobless Claims Are Higher Than Predicted

The U.S. Bureau of Labor announced this week that jobless claims remained almost unchanged from last week and worse than economists’ predictions.  As a result, there is growing concern that the job creation we saw earlier this year may be short-lived.  Jobless claims have been above 385,000 for three weeks in a row—making it the first 3-week streak since November!  They are getting awfully close to the 400,000 level, which is generally considered the line for determining whether job growth can raise or lower the unemployment rate.  A three-week pattern tends to suggest that the firing slowdown may have ceased for the time being.  Still, there are plenty of hiring employers, so don’t give up!  April’s unemployment figures come out next Friday, so let’s hope for better news!

 

Jobless Claims Are Higher Than Predicted

The U.S. Bureau of Labor announced this week that jobless claims remained almost unchanged from last week and worse than economists’ predictions.  As a result, there is growing concern that the job creation we saw earlier this year may be short-lived.  Jobless claims have been above 385,000 for three weeks in a row—making it the first 3-week streak since November!  They are getting awfully close to the 400,000 level, which is generally considered the line for determining whether job growth can raise or lower the unemployment rate.  A three-week pattern tends to suggest that the firing slowdown may have ceased for the time being.  Still, there are plenty of hiring employers, so don’t give up!  April’s unemployment figures come out next Friday, so let’s hope for better news!

 

Are Wall Street Banks Hiring?

According to a recent article in the Wall Street Journal, investment banks still aren’t in any rush to hire.  New regulations and fewer mergers and acquisitions have led a number of banks to begin to cut down their robust investment banking groups.  Those anticipated to be leaving include not just those on trading desks, but deal makers and corporate advisers.  Bonuses have also shrunk in an effort to cut costs—in fact investment-banking bonuses shrunk by as much as 30% in 2011 at major banks!  There is certainly a shift taking place on Wall Street, though the ultimate outcome is still unknown.  Many bankers are reevaluating their career trajectory, opting for boutique investment firms or switching industries entirely…We may just have to wait and see how it all pans out!  

 

5 Things to do Before Beginning a Start-Up

If you are an entrepreneur, the world of start-ups is both daunting and exciting and starting a company from the ground-up comes with both rewards and challenges.  In most cases, you learn as you go.  However, prior to taking the big leap, fellow entrepreneur, Laura Wallendal, Co-founder of WorldBrain, has a few suggestions of things that you should do before you start:

1.       Talk About It

Become comfortable talking about your start-up idea.  All details do not have to be concrete yet.  Talking about it with others will give you the ability to gain some very helpful feedback.  As you will learn, the insight you receive will far outweigh your fear of someone stealing your idea.

2.       Ask a Lot of Questions

A large part of entrepreneurship involves learning as you go so be willing to ask any and all questions.  Look to industry experts and fellow entrepreneurs for answers.  No questions are dumb.

3.       Market Your Knowledge

As an individual founding a start-up, you already know you have a creative mindset and some knowledge about the industry, your target audience, and beginning goals.  Use this expertise and begin to brand your company and yourself.  Blog, Tweet, and take other steps to share your ideas, meet people, and build the anticipation surrounding your new company.

 4.       Get an Adrenaline Rush

Founding a start-up is frightening, thrilling, and definitely an adrenaline rush, so you should begin to adjust to this feeling before you begin.  Go skydiving, bungee jumping, or any other activity that pushes your nerves to the edge and pulls you away from what is comfortable.

5.       Find a Way to Unwind

The life of an entrepreneur is often stressful and hectic.  It is important to find ways to clear your mind, relax, and just breathe.  Whether it is running, meeting up with friends, or reading a good book, learn what works best for you.

Although beginning a start-up is unpredictable, following these steps will begin to prepare you for what’s head.  Best of luck on your journey!

 

New Study on Sitting at your Desk

Do you go crazy sitting at your desk all day? You body may be telling you something important!  We always knew sitting at your desk and staring at a computer screen all day wasn’t great for your physical or mental health, but a recent study determined just how bad it is.  According to researchers at the University of Sydney, people who sit for between eight and 11 hours a day are 15 percent more at risk of death…from all causes!  Researchers compared the health of people who sat for eight to 11 hours a day to those who sat for four to eight hours a day.  Even worse, people aged 45 and over who sit for 11 hours have a 40 percent increase in their chances of death.

So how do we reverse this trend? Apparently not through exercise!  The study determined that exercise cannot improve the situation—the only solution is to sit for fewer hours of the day.  Many offices are beginning to implement standing desks, which are said to help.  Prolonged sitting is simply not good for you.  So if you’re concerned about your health, make some time in the day to get up and walk around!  Take a walk during lunch or submit a proposal to human resources for standing desks.  Or, if you’re searching for a new job, look into companies that have more casual or flexible work environments, where you may not feel so chained to your desk. 

CEOs at Asset Management Firms Earn More

In the past few years, Wall Street banks have had some trouble staying afloat amidst regulations and turbulent financial markets.  However, it seems asset and wealth management firms have been doing just fine.  While CEOs’ bonuses shrunk considerably at the country’s top investment banks, bonuses at some top asset management firms actually rose.  It was recently reported that the total compensation for the chief executives at Federated Investors Inc., Franklin Resources Inc., and T. Rowe Price Group (three of the U.S.' top seven asset management firms) increased by 28% in 2011.  This success can be primarily attributed to the fact that asset management firms are able to avoid a lot of market volatility managing steady mutual funds.  Bonuses also improved for asset and wealth management firms’ general employees.  In 2011, bonuses were expected to increase by 5% for asset management, while they were expected to fall by 20% to 40% for U.S. commercial and investment banks.