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Category: Budgeting

Financial Readiness for College Graduates

Have a new college graduate? Give your loved one the gift of financial readiness.

This is the time of year when college graduates prepare to make their career dreams and goals a reality. Despite their degrees, however, they may be ill equipped to face financial challenges. According to an ongoing study by the National Financial Educators Council, the average level of financial literacy in 19-24 year olds is 69%.[1]

College graduates may not be as confident in their abilities to earn, save, and invest their money as you had hoped. Here are 3 tips that can help you prepare your new college graduate:

Tip 1: Consider buying them life insurance.

New graduates are typically excited about their independence and sense of accomplishment. You can help by buying life insurance policies in their names. Buying life insurance now also increases your chances to obtain the lowest, initial rates.[2]

College graduates are generally healthier now than they’ll be in 10 years. Policies increase in cost over time and provide added financial security later in life.

Tip 2: Encourage your graduate to focus on college debt repayment.

College loans compel graduates to make repaying their debt a priority. For the class of 2017, the average graduate debt was $39,400, an increase of 6% from the previous year.[3]

Graduates may in rare cases, such as enlisting in the military, be granted a postponement in repaying their college debts.[4]

Encouraging graduates to work with financial professionals in creating debt-management plans is one of the best approaches. Developing a financial plan early in life helps create disciplined habits of responsible money management that should last a lifetime.

Tip 3: Discuss the importance of starting to prepare for retirement.

Just to sustain an annual $40,000 income, one would need to have saved nearly $1.2 million. However, only 25% of millennials say they believe they’ll need at least $1 million to retire comfortably.[5]

While graduates have several decades of income earning potential, reinforcing the discipline of saving and investing for retirement will pay dividends in so many other areas of their life. By starting early in their careers, millennials will have more opportunities to build and meet their retirement goals.

The statistics are bleak: About two-thirds of Americans say they expect to outlive their retirement savings. Nearly a quarter of Americans have nothing saved. About 10% have less than $5,000 saved for retirement.[6]

Helping today’s college graduates avoid becoming part of that statistic will provide a lifetime of benefits.

All families, including college graduates, face financial challenges. If you would like to learn more about preparing financially for every stage in life, we’re happy to help.

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[1] https://www.financialeducatorscouncil.org/national-financial-literacy-test/

[2] https://www.investopedia.com/articles/personal-finance/100615/getting-life-insurance-your-20s-pays.asp

[3] https://studentloanhero.com/student-loan-debt-statistics/

[4] https://studentaid.ed.gov/sa/repay-loans/deferment-forbearance

[5] https://www.cnbc.com/2018/01/16/how-much-money-millennials-think-they-need-to-retire.html

https://aperioncare.com/blog/millennials-on-aging/

[6] https://www.cnbc.com/2018/05/11/how-many-americans-have-no-retirement-savings.html

Check out CapSouth Wealth Management blogs at http://capsouthwm.com/blog/

How About Another Poem, Huh?

images

That Sink Full of Dishes

Twas the day after Christmas
And all through your pockets,
Are the receipts for the toys,
The rings and the lockets.

With much trash at the curb
And food under the table,
You’ll get to those dishes
Just as soon as you’re able.

But for now, you will rest.
For the couch you were meant.
With but one thought in your head,
“Just how much have I spent?”

With the swipe of your card
And the stroke of your pen,
That balance is rising
Toward the limit – again.

Off the couch do you spring!
With the thoughts of a budget.
But you’re unsure of the numbers…
So maybe you’ll…fudge it?

First things first, my friend.
And this step may be hard:
Focus more on good stewardship
And less on your card.

Take stock in your cash flow
The coming in, the going out,
And if headed the wrong way
Then quickly – come about!

Don’t have it, then don’t spend it.
Yes, it’s so easy to say,
But for control of your finances
There is no better way.

Know where you’re starting
And know where you’re going,
Give, save and then spend
And let margin start growing.

For margin is good
In every area of life.
It’s a guardrail of sorts
Keeping loved ones from strife.

So make a plan and begin
To get back in the black,
And chip, chip away
At that credit card stack.

And use this new budget
To help sort out your wishes,
And get back to your life
And that sink full of dishes.

It won’t happen overnight
But soon you will see,
That the plan you have made
Just might set you free.

Free from the worry
The stress and the strife,
And may give you more time
With your husband or wife.

And if you have neither a husband or wife, then you’ll have more time for yourself. See? You can’t lose. Make a plan. Make a budget. Start now.

And from my family to yours,

Merry Christmas and Happy New Year!

The Rub With Old People

imagesM0DT5P5GYou can teach an old dog new tricks, it’s just harder. But why? Why is it harder? Are older folks incapable of learning? Of course not. I be old, and I still getting smarter. So what else? Maybe age has a way of hard wiring your brain into certain patterns of thought? As Dr. Kathleen Taylor from St. Mary’s College in California states, “…continued brain development and a richer form of learning may require that you bump up against people and ideas that are different.” Okay. Let’s rub up against a few different ideas and people from the news this week. The different idea: Starbucks is anti-Christian because its cups are a different shade of red, and the tree print is no longer there. The different person: Donald Trump is the GOP’s leading candidate for the presidency OF THE UNITED STATES. Let’s see…uh…nope. No continued brain development here. In fact, I think I’m less developed now. While I could write plenty on each of those ridiculous statements, I’ll summarize both with one word: A sad state of affairs. But there’s hope for us all in a new segment I’m calling:

My Kids are Smarter than Me:
This week’s edition comes from Charles Henry, age 7, a Leo from Nashville, TN. (The fact that he’s a Leo has about as much relevance to this story – or to anything for that matter- as a red cup has to Christianity. But I digress.) Upon returning from the store, his mom asked him to help put up the groceries. Charles Henry was given eight rolls of toilet paper, with instructions to put two rolls in each bathroom. He paused momentarily, then asked, “Mom…can I have one for the woods?” Mom was stunned. Dad was beaming with pride! He’s making a plan. His experience with such matters made quite an impression on him, apparently, and drove him to action. As the old saying goes, “Soil me once, shame on food. Soil me twice, shame on me.” Okay, maybe no one says that. But here’s the point: He’s been caught once; he won’t be caught again. Quick learner. So why can’t adults be quick learners? As the aforementioned research would suggest, we’ve obviously been rubbing up against the wrong ideas and people.

So let’s try a different idea or two:

You don’t all of the sudden find yourself in large amounts of debt. Well, you might, but you shouldn’t. It doesn’t happen overnight. You’ve made the decision, lots of times, apparently, to pay later for something you want now. Debt is like aging. Left unchecked, it’s going to hurt.

It’s okay not to always have what you want. I know that hurts, but wouldn’t you rather go to bed wanting than owing? Don’t let income drive your spending. And don’t habitually spend more than you have. Create breathing room between what you earn and what you spend. It’s called margin. Life is better with it.

How about a different person:

You. Young or old, you can change. While you may have deeply rutted paths in your synapses – blah blah blah – behaviors can change. “You don’t get it,” you say. ”My situation’s different.” Nope. It’s not. All of us have limited amounts of time, talents and resources. And with those limits, comes the responsibility to manage them. And while you don’t have to go it alone, you do have to take the first step. Rub up against someone who’s qualified to help and just ask.

It starts with a question. Charles Henry knew his. What’s yours? Call us. We can help.

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