Be Aware of Tax-Related Scams

For many young adults, college is the first time they are independently managing their own money. It can be a time marked with excitement and new opportunities, or anxiety and worry. Financial skills built at this time can have long-lasting benefits. Likewise, money mistakes made now will carry on into their future. That is why about 70 percent of college students worry about their finances[i]. However, with the right skills and habits, this can be a great time to lay a strong foundation for their future financial independence.

The first financial decision that most college students encounter are student loans. Before taking out student loans, make sure to explore other financial aid options, such as scholarships and tuition assistance from participating employers. Also, don’t forget the option of going to local community colleges for the first couple of years. If student loans are an option, it is best to resist the temptation to take the maximum amount one qualifies for. Instead, borrow only what is needed. This will help in the long run. College is an investment, and students need to be sure that their rate of return is worth it.

It is imperative that young people know how to budget, but unfortunately, that’s largely not the case. In fact, 43 percent of college students don’t track their spending[ii]. This is particularly crucial for those who have student loans. You can help your young people early by introducing them to the concept of budgeting well before you’re packing them up for college. A budget is not simply an account of where one’s money goes. It aids in making decisions, establishing financial priorities, and staying aware of how your money is working for you. Please always remind your college students that the less they spend now, the more they’ll be able to move forward in the future.

Another common first for college students is the first credit card. Credit cards are a good tool to establish small lines of credit, but monthly balances should always be paid off immediately. Not only does this avoid late fees, but it also avoids interest building on purchases. Also, protecting personal information is imperative. Students need to constantly be aware of who they are giving their information to and what is being charged to their account.

College is a busy time full of “firsts”. These experiences can have long-reaching consequences. Help your college students prepare a solid foundation to their financial independence by providing them with the proper education and tools for a bright financial future.

[i] https://news.osu.edu/70-percent-of-college-students-stressed-about-finances/

[ii] https://www.affordablecollegesonline.org/college-resource-center/student-guide-to-budgeting/

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

With a long weekend with my sons and my wife out of state for a reunion with friends, we found our way to Home Depot, the library, a car wash, and of course, a local pizza parlor. These small, but meaningful experiences for our boys’ weekend left me appreciating why a commitment to an automatic, monthly savings plan provides clarity and confidence within our day-to-day lives. We ventured out as my wife enjoyed the time with her friends, knowing we had already committed to saving a determined dollar amount, prior to the decisions of this weekend, this week, and this month. Some months naturally are more expensive than others, and outside of December, it’s hard to anticipate which month(s) will squeeze you. So, this confidence can be had when you have ALREADY settled on your 401k contribution, Roth IRA contribution, your non-retirement investment account contribution, your 529 plan contribution, your insurance contribution, and other vehicles you may be using to save for your priorities. There are a lot of options, but when accounts are being funded, the money isn’t available to spend, and you are taking advantage of dollar-cost averaging.

Once in place, what’s left to spend, is up to you. You will still need to manage the groceries, gas, and other (Target, of course), but I’m confident that you can live the life you want to live, spend intentionally, and still remain on course for future financial independence. More income creates more options, yet the behavior of savings is for everyone. If you have a structure, you can make incremental changes as income increases and priorities change. Eventually, you will have worked towards saving 15%, then 20%, and then 30%. It’s easier to retire when you are comfortable when living off of $.70 of every dollar. As a Decision Coach, I help families navigate how to best allocate their income on a monthly, quarterly, and annual basis through consistent and intentional communication. This provides an immense amount of clarity when your future priorities are already being saved for, especially when my boys want to grab ice cream on the way home, and I have no hesitation in saying, “Yes.” Please contact me at mark.nicolet@trilogyfs.com if you are interested in discussing your personal situation.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk, including the risk of loss. Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.