Al-Huda
Foundation, NJ U. S. A
the Message Continues ... 5/182
Newsletter for January 2017
Article ... 1 - Article ... 2 - Article ... 3 - Article ... 4 - Article ... 5 - Article ... 6 - Article ... 7 - Article ... 8 - Article ... 9 - Article ... 10 - Article ... 11 - Article ... 12
Bits of financial advice for millennial
By Barbara Wheleham
Managing money is generally not
taught in elementary school.
About 17 states require students
to take a personal finance
course in high school, but only
a handful require testing on the
topic, according to the Council
for Economic Education.
When it comes to money, it's
better to learn from other
people's mistakes than to make
your own. Follow these tips when
you're young to avoid financial
hardship in life.
Go to college
You may want to do something
that doesn't require a college
degree, such as playing
professional golf. But give
serious consideration to
enrolling in college anyway.
Yes, it's a major investment,
but if your parents are unable
to help you pay for it, make it
happen yourself, even if it
means taking out loans. Just
don't get in over your head; try
to borrow no more than the
amount you expect to earn the
1st year after graduation. That
way you can pay off the loans
within 10 years. One way to save
on costs: Go to a community
college first; then transfer to
a 4-year university after 2
years.
It's easier to get a degree when
you're young than when you have
a home, family and all the
attendant adult
responsibilities. Your earnings
potential increases
significantly with a college
degree -- which will come in
handy if your other dreams don't
materialize. Plus, you will
likely experience a love of
learning that you will never
outgrow.
Find your purpose
If you're having trouble
figuring out what you want to do
with your life, look within. You
were born with certain talents
and natural abilities. You know
which subjects you excel in and
which ones you struggle with.
Choose a career that enables you
to maximize your gifts in a way
that fulfills you or helps
others. As you grow, your career
may change along with your
desires. But for now, gravitate
toward a field that feels like
home.
Begin retirement
planning with your 1st job
This tip is so important. If the
company you work for offers a
401(k) plan, sign up at your 1st
opportunity. If there's no such
plan, divert some of your
paycheck into an IRA. Believe it
or not, if you're lucky, one day
you'll find you are older, so
it's best to be prepared.
Setting up automatic
contributions to either one of
these retirement vehicles at a
young age will help you build
wealth painlessly.
Naturally, the more you earn,
the more you can stash. Sock
away at least 7% of your
earnings in the beginning, and
increase it each year until
you're diverting 15% a year.
Place a value on
money
It doesn't buy happiness, but it
can certainly make you
comfortable. Just understand
what it's worth. Money is what
you earn in exchange for your
time in some productive pursuit.
Let's say you earn $20 an hour
at your job, and you're
considering purchasing a TV for
$500. You may calculate that you
spend 25 hours, or about 3 days,
earning that money. It's worth
it, you may think. But that's
not an accurate value estimate.
If you're single, you're in the
25% tax bracket, so you actually
spend about 33 hours earning the
net income required to make the
purchase. It still may be worth
it, but there may be competing
demands for that money, such as
rent and car payments, not to
mention your retirement fund.
Each purchase represents a
trade-off. Make these decisions
wisely.
Use the credit card
sparingly
This tip is also really vital.
It's easy to spend now with
plastic and much harder to pay
later. Use credit responsibly. Comparison-shop
for your card.
Remember that you'll be relying
on your future earnings to pay
for today's credit card
purchases. And if you keep a
running balance, you'll also be
paying interest, sometimes at
usurious rates. Don't fall into
this trap. Instead, save money
to meet financial goals.
Follow the golden
rule
Contrary to popular belief, the
duplicity and craftiness of
Machiavellian tactics won't
really help you survive.
Instead, they'll engender
mistrust in your relationships.
Treat others fairly, the way you
wish to be treated. No one looks
good when trying to make others
look bad. When you're on the
job, avoid gossip. Beware that
when someone takes you into his
or her confidence to point out
someone else's foibles, it's
only a matter of time before
your foibles come to light.
Select your partner
wisely
Choose someone whose values
match your own -- not just where
money is concerned, but more
importantly, ethical and moral
values. Get to know your soul
mate over the course of at least
a year. Passion is important,
but trust even more so. Make
sure you are free to be
yourself. If you hook up with an
angry or overly critical
partner, you will be subjected
to hostility and may lose your
sense of self. Conversely, if
you're the one with anger
issues, resolve them before they
poison a perfectly good
relationship. Learn to make
decisions with your heart,
along with your head.
Be prepared for the
unexpected
Someday you may lose a job
through no fault of your own.
Prepare today by stashing money
into an accessible emergency
fund. The easiest way to do this
is to automatically divert a
portion of your earnings into a
savings account in addition to
the amount you're contributing
to a 401(k) plan or IRA.
Try not to use that 401(k) money
for emergencies. It will cost
you plenty, between income and
penalty taxes. For instance, if
you have $10,000 in your account
and you're in the 25% tax
bracket, you'll lose $2,500 to
taxes, plus pay another $1,000
penalty for breaking into the
money before you reach age 55.
(For IRAs, the early withdrawal
penalty applies up to age 59
1/2, with certain exceptions.)
Bottom line: Your $10,000
dwindles to $6,500. Worse, you
will have lost the opportunity
for that money to compound and
build wealth for your
retirement.
Learn about investing
or hire help
Make sure
you understand the fee structure
of the services. Is it
commission-based or do you pay
an hourly fee or a percentage of
assets or some combination of
these fees? Ask for a complete
breakdown. Also, check with the
appropriate authority to see if
any disciplinary actions have
been taken against a certified
financial planner or broker
before you initiate contact. If
you're confident enough to
choose your own investments, you
might find that going with a robo-adviser is
the best bet.
Be thankful for your
good fortune
It's not all
about money. If you work at it,
you will have abundance --
through strong family ties and
solid relationships, as well as
monetary assets. Take some time
out each day to reflect on the
good in your life. Spend at
least 1 day a week in a
recreational activity or hobby
that you enjoy, and take a
minimum 1-week vacation annually
if you possibly can so you can
totally unplug and unwind.
Again, save for the trip. If you have
children, spend as much time as
you can with them when they're
still young and dependent on
you. Before you know it, they'll
be old enough to get a driver's
license, and you'll see less and
less of them from that point on. |
HOME - NEWSLETTERS - BOOKS - ARTICLES - CONTACT - FEEDBACK - UP
DISCLAIMER:
All material published by Al-Huda.com / And the Message Continues is the sole responsibility of its author's).
The opinions and/or assertions contained therein do not necessarily reflect the editorial views of this site,
nor of Al-Huda and its officers.