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May 12, 2015
Advice for the College Graduate
Next weekend is graduation weekend at the University of Virginia and many other colleges and universities throughout the country. It’s a wonderful time to celebrate achievements, spend time with loved ones and look forward to new horizons. It’s also time for our graduating children to “leave the nest” and, hopefully, become wage earners. When you are contemplating what to get your newly minted college grad, don’t forget to toss in a little free financial advice to help them make the most of that new pay check.
The good news is that the investment in a college degree was a great move. According to the Census Bureau, people with a bachelor’s degree will have median lifetime earnings that are 77% higher than someone who only completed high school. Engineering students can expect lifetime earnings, on average of $3.5 million while education majors can expect $1.8 million, in today’s dollars. But these same students are starting out with significant debt. 60% of college students who graduate from the school they started will emerge with student loans averaging $27,300, according to the College Board. Here are a few tips to pass along to help your college graduate make the most of his or her pay check and prepare for a long and happy, financial life.
Make a debt management plan - If your grad has student loans or other consumer debt, it is important that they understand the terms of the loan agreement, when the payments are due and make debt curtailment a central part of any financial plan. Visit salliemae.com for more information about education loan debt management.
Start saving now - It’s tempting to splurge on a few luxury goods or exotic vacations when the paychecks start rolling in, but college grads need to create a discipline by saving for retirement early on. My January blog illustrated the dramatic difference in retirement savings when the saver started early. It’s a good practice to put away 10-15% of earnings every year for retirement. An easy way to do this is for employed grads to take advantage of their employer’s 401K plan and any matching programs.
Borrow wisely - Your grad will want to borrow against future earnings for major purchases such as a car or a home. This kind of debt is easily managed during their earning years. Grads need to beware of excessive credit card debt that continues to revolve. This is the time to differentiate between “need” and “want.” They will want to be sure their mortgage and other monthly debt payments do not exceed 35% of their gross monthly income. Advise them to get into the habit of paying bills early to avoid late fees. It’s also a good idea for a grad to pull his or her credit report to address any issues that could come up with an employer’s background check or a mortgage application.
Think cash flow - Your grad’s greatest working asset is his or her ability to work and earn income for the next forty years. When thinking about investment strategy, an understanding of personal cash flow is key. Investors in their 20s and 30s are often advised to put the majority of their savings into the stock market because they have a long term investment horizon due to age. This makes sense if the investor has a steady pay check and can manage their day to day cash needs from that. If their income is volatile, they may need supplemental income from bonds. This is also the case when they approach retirement.
Protect what you earn - When you are in your 20s and 30s, it seems like nothing bad could ever happen, but grads need to prepare for the worst. They need to consider how their life would change if they were sick or injured and unable to work. Health insurance, life insurance and disability insurance are all offered by most employers and are available for purchase for those grads who are self employed. Life insurance becomes important if the grad has a family or other people relying on the income he or she is earning. If single, disability insurance becomes critical as there may be no other person to rely on for financial support. Life insurance and disability insurance become less important once the savings plan is fulfilled and money is available to cover an interruption in earnings.
Just in case... - Your grad will most likely have several jobs before retirement. Some of those career moves will be by choice and some by lay off. In addition to saving for retirement, your grad should have a goal of having six months of salary saved and liquid, just in case of a gap in employment.
Ok, enough advice. Grab the camera and champagne and enjoy the moment. Congratulations.
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May 12, 2015
ParadeRest Virginia Celebrates Our Local Military and Their Families
Composed of veterans, non-veterans, and representatives of the University of Virginia and Charlottesville area community, the ParadeRest Board of Directors has donated its time since 2009 towards providing ways to engage military and their families with the local community. Expressions of gratitude have taken the form of donated tickets to entertainment and sporting events, as well as planning for a variety of community events, including an annual commemoration of Memorial Day at the Paramount Theater in downtown Charlottesville and open to the public. This year’s event is scheduled for Sunday, May 24th. Doors open at 1:00 pm and Board Chair, Glenn Rust, CEO and President of Virginia National Bank. will kick off the program at 1:30 pm by introducing special guest speaker, Lieutenant Colonel Mike Stroble, followed by a showing of the movie Taking Chance. The entire community is encouraged to help celebrate and honor our military and their families on this special holiday weekend.
ParadeRest Virginia Memorial Day Celebration
Sunday May 24, 2015
1:30 pm- 5:30 pm
The Paramount Theater on the Downtown Mall
Complimentary Event for the Entire Family
Special guest speaker Lieutenant Colonel Mike Stroble
Showing of Taking Chance
Visit paraderestva.org for more details
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