New to the Workforce

Are you a new graduate or just getting started in a new career? Now is the perfect time to lay the groundwork for a healthy financial future.

Establish a budget 
Now that you have your own income, you'll need to decide how to budget it. Ask yourself:

• What can I afford to pay each month for living expenses, including rent, food and entertainment?
• What types of payments do I need to make on debts such as student loans?
• What other types of new expenses do or will I have? Do I need to buy clothes for my new career? A car to commute? Furniture for a new apartment?

Our Budget Calculator can help you start working out your figures.


Insure yourself 
Be sure to include appropriate car, health and renter's (or homeowner's) insurance in your new budget. Even if you vow to be careful and your home and body are in good shape, the unexpected can always happen—which can devastate you financially and put you in debt for years.

If anyone depends on you for income, also consider life insurance. It will help to replace your income and pay expenses should you die unexpectedly. Even if you have life insurance at work, you may want the added protection of your own life insurance policy.


Create a cushion 
Now is a good time to build an emergency fund—with enough to meet your basic needs in the event of job loss, medical crisis, major car or home repair or other unexpected expense.

If you situation is typical, you may want to set aside enough money to cover at least three months of living expenses—including housing, food, insurance, car payments and other essentials—should you temporarily be without income.

Your emergency fund doesn't have to be in cash—you may have it in low-risk, liquid investments, such as money market funds or Treasury bills.


Invest for retirement
Retirement may seem far away, but it's one of the most important goals for which to plan. After all, isn't one of the reasons you have a job to save up enough to stop working one day?

You don't need to be rich to start planning for retirement. In fact, with compounding and smart investments, the earlier you start, the less you may have to put aside in the long run—which can save you money later in your career.

Think about investing in or both of these popular accounts:

• Individual Retirement Account (IRA): An IRA lets you set aside money for your retirement each year, with potential tax benefits (provided you meet certain eligibility requirements). IRAs come in two basic flavors—traditional and Roth—each with slightly different rules and benefits.
  
  
• 401(k): If the company where you work has a 401(k) plan, consider investing the maximum amount in it each time you get paid, especially if your employer matches your contributions (after all, why turn down the free money?). If that isn't possible, even small contributions each month can go a long way.

Investing in both a 401(k) and an IRA can go a long way toward funding your future retirement.


Build your portfolio 
Once you have your basic needs covered—including insurance and emergency funds—you can start building an investment portfolio. Investing can help you meet a variety of goals, both short-term and long-term. Be sure to:

• Start early. Too many people think you have to be wealthy before you can invest. But that thinking is backwards. You can start investing with just a small amount—and with a smart strategy, that small amount can grow.
  
  
• Write down your goals. How do you see yourself living over the next several years? Do you want to take a big vacation? Buy a house? Go back to school? Have children? Then think about the distant future. Do you want to own your own business? When do you hope to retire? Write down all of your goals that will take money, as well as how soon you hope to achieve each one. This will help you figure out what types of investments will work for you.
  

Ask for help
Don't be afraid to sit down with an investment professional to get help with goal and investment planning. Investment professionals are trained to help you find the right balance of investments for your goals and lifestyle.

To set up a free consultation, find an investment professional at a WaMu financial center near you.