The Independent Voice of Southern Methodist University Since 1915

The Daily Campus

The Daily Campus

The Independent Voice of Southern Methodist University Since 1915

The Daily Campus

The Independent Voice of Southern Methodist University Since 1915

The Daily Campus


Students need to look ahead to get ahead

For many students graduating in May, the primary concern lies in finding a job, but what happens when you finally find one? Newly minted graduates face increasingly important financial decisions as they begin earning a steady income.

David Lee graduated from SMU in December 2011 with a degree in advertising. Now working at an advertising firm in Boston, Lee discovered that understanding the kinds of benefits a company has to offer is equally as important as evaluating the starting salary and has helped him to better prepare for the future.

“Communicating with the HR department about the sorts of benefits and investments they offer was a really good decision,” said Lee. “Understanding company plans and getting investment advice from my coworkers helped me plan for the long-term.”

According to Jennifer Graves, the vice president of investments at Chase Bank, and Jonathan Minder, an investments representative from Fidelity Investments, the number one mistake that young people make is related to how much of their savings they are allocating towards retirement.

“If you ask people in their thirties, forties, and fifties what they wish they would have done, it’s to start investing in their twenties,” said Graves. “It’s very powerful.”

While monitoring discretionary spending is a practical way to save, Minder and Graves agree that a 401(k) is a great place to not only save money, but to grow money over time. The advantage to starting a 401 (k) is that you can contribute to the account before taxes-the money will then continue to grow tax-free until you retire. Employers typically match in funds what you decide to allocate towards your 401(k).

“As long as you sign up for it, you don’t have to worry about it, it’s taken out of your paycheck. It’s out of sight out of mind,” said Minder.

According to Minder, most 401(k) plans offered by employers will have a form of what is called a “target date fund.” With this type of fund, fund managers can compose a group of investments that will adjust based on the expected date of your retirement.

“Since it’s a dated fund, it actually gets more conservative as you get closer to retirement,” said Minder. “So you could actually put your money in this and let it ride all the way to retirement and you should be allocated appropriately throughout that time period.”

So how much money should you set aside for savings every month? The answer varies according to an individual’s financial situation, but Minder would recommend directing at least 10 to 15 percent of your monthly income towards a savings retirement account. However, there is a limit imposed by the IRS each year as to how much an employee can put in that fund-this year it’s $17,000.

“Even if you’re saving just a little bit anything is better than nothing starting out. Every dollar helps,” said Minder.

Weston Helms, a graduating senior majoring in finance, is already preparing for the financial shift after he graduates.

“The budgeting advice was save, save, save as much as you can,” said Helms referring to his parents. “It only builds good habits. They will help with things such as rent especially if I live in New York City to help me get my start.”

If you’re unsure how to budget your current finances, online tools like MyMoney.Gov, run by the U.S. Financial Literacy and Education Commission, can help you make educated financial decisions for your college years and beyond.

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