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Top 7 Financial Planning Tips For Young Employees

Proper financial planning can help you prepare for your future. For unexpected expenses, enrolling in employee loan programs is a good option. Having a stable source of income can help young employees get started on their road to financial security. However, this journey can be challenging. People working for a long time know the importance of financial planning. If you are new to the workforce, you may not be as familiar. It may just be a concept you have heard before.

So, how will you get started?

Financial Literacy

Understanding the basics is a must. To properly plan and manage your finances, you have to be financially literate. This is something that many individuals overlook. In the United States, only 57% of adults are considered financially literate.

What you can do is educate yourself. Learn to research. Know more about your finances, such as taxes, debts, loans, and interest rates.

Budgeting

You should also learn how to budget your money. Track all your expenses. Making a list of  all spending may help.

Then, evaluate your expenses. Categorize them into needs and wants. Prioritize your needs. See if there are any items from your wants that you can remove or lessen.

Stick to your budget. Do not overspend.

Save Money

Include in your budget the amount you should save. When it comes to saving money, it is best to start young.

Allot a specific percentage of your income as savings. To prevent yourself from spending it, consider opening a separate bank account.

Employee Benefits

Check for employee benefits available to you. Ask your company’s human resources department about them and how you can enroll. Common examples are health insurance, Health Savings Accounts and gym membership.

Some companies help their employees get low-cost loans through employee loan programs. You may also be eligible to apply for an affordable loan even if your employer does not participate in such a program.

Retirement Planning

Even if you are still young, you should be planning for your retirement. Figure out the lifestyle you want to have once you stop working. How much do you think you will need to enjoy it?

A good strategy is to max out your 401(k) savings options. You can do this through your employer, which means a specific amount will automatically be deducted from your paycheck and will be placed in your 401(k) contributions.

Protecting Your Future

Aside from your retirement, you should also prepare for various things. Consider getting insurance, such as  life and long-term disability insurance policies. These will protect you against unexpected expenses in case of a covered peril or situation. It is also easier to qualify, and the rates are cheaper when you buy these insurance coverages when you are young.

Emergency Fund

Try to set aside a small amount every week or month for unexpected expenses that may come up. This way, you would not need to use your savings or withdraw from your retirement funds.

If you happen to have an emergency that resulted in huge expenses, consider employee loan programs. SNBNY, for example, offers ACCESS LOANS® low-cost loans for employees facing financial hardship.*

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