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Friday, January 06, 2006

10 financial strategies for the new year

CNN Money has a guide listing 10 strategies that will help you achieve your financial goals. Although this guide is not new, since it is the beginning of a new year, I thought it would be appropriate to touch on and emphasize some of the points important for us recent graduates.

However, don't follow the list in the order provided, the list wasn't written with recent grads in mind. Instead consider my reranking, starting with the most important:

1. Get out of debt.
Take the advice in that page and come up with a plan to eliminate your credit card debt. Don't worry about your student loans just yet, the interest rates on those are extremely low, that is unless you haven't consolidated and locked in a low rate (which you should do asap, refer to my earlier post).

2. Save more money.
Start not by maxing out your 401(k), but instead by creating an emergency fund. Try to save at least 3-6 months worth of expenses in an interest bearing, liquid, and easy to access account (HSBC Online Savings for example). Remember the emergency fund is for emergencies only (unemployment, medical, etc.), don't dip into it for any other reason! Only after your emergency account is fully funded should you proceed with the rest of the article's suggestions, such as maximizing your employer's 401(k) match.

3. Jump start your career.
Since most of us will be at our first job, we may not fully understand how the corporate world works. There are a lot of tips here that will not only help you impress your boss and your coworkers, but also teach you how to network and build professional relationships.

4 & 5. Create a long-term investing plan and Invest smarter.
Again, this only begins after you have fully funded your emergency plan. I will touch on this in a future follow up post.

The remaining points, while helpful, don't really apply to recent graduates. However, they do make for good reading, so feel free to skim through them.

Why did I rank them in that order? I firmly believe that paying off your debts, establishing a routine of saving, and performing well at work will pay huge dividends later on.

As always, feel free to leave comments. How would you rank them?


Blogger furiouspato said...

i like how one of the strategies is to stop being fat. god knows you cant be rich if youre fat. "hey cnn i need help. how can i help myself financially?"
"lose weight fatty."

9:15 PM  

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