Alumni advice: the Do’s and Don’ts of financial planning
Katie Jarret Burke ’03 offers practical financial planning strategies for the Class of 2016 and young alumni.
By Sarah Collins ’18
Katie Jarret Burke ’03 jumped into financial advising shortly after graduating from Elon when she took a job at a Baltimore-based firm as a mutual fund accountant. Shortly thereafter, she was given the opportunity to work for a Wall Street firm in Philadelphia. The biggest change for Burke came about two years into her tenure in Philadelphia, when she was relocated to San Diego. With the experience she gained, she was able to do something most young financial planners can only dream of – open her own firm. She founded Method Financial Planning in 2015 and has served as a leading light for women in finance in the San Diego area, co-founding San Diego Women in Finance in 2011.
Burke recently spoke with E-net to share tips for young alumni and recent graduates about financial planning.
What is the most common mistake you notice in recent graduates’ financial planning?
The most common and most costly mistake is not having a plan. One of the first things you should do when you secure your first job out of college is to take the time to create a budget and stick to it. There are quite a few apps available for your smart devices to help you keep on track. Be sure to factor in all your expenses (housing, auto, student loan repayments, insurance) as well as savings. Also focus on building an emergency fund with 3-6 months of expenses saved.
You should also carefully review the benefits your new employer offers and seek a professional opinion to make sure you are maximizing your benefits. There will be quite a few options for insurance coverage as well as a list of investment options for saving in your employer-sponsored retirement plan—401(k), Roth 401(k), 403(b). Do your homework before making your elections to make sure you are getting the most out of your benefits.
Finally, do not forget to plan for your personal insurance needs. If you are now renting be sure to get a renters insurance policy to adequately cover your belongings. Make sure you update your car insurance if you are relocating to a new city.
When should alumni start planning for retirement?
As soon as possible. Use your budget to determine the amount you can start contributing to your employer-sponsored retirement plan the day you are eligible. Most employers offer a company match to incentivize you to save and participant in the plan. This “match” is free money that you are missing out on if you do not take advantage of the plan. The sooner you start saving the more time you are giving your money to work for you through the concept of compounding. The longer you wait to save the harder it will be to catch up on your savings in the future.
Where should young alumni seek advice?
There are financial planners located across the country who are focused on helping young professionals. Seek out a fee-only CERTIFIED FINANCIAL PLANNER TM to provide you with objective advice and guidance on your personal financial goals. CFP® professionals must complete extensive training and experience requirements and are continuously held to rigorous ethical standards. Also, look into using a budgeting app to easily keep track of all of your expenses on your phone. Many companies also offer financial wellness programs for their employees and may subsidize consultations with a financial planner. The sooner you get educated about the importance of saving for your future, the more sound financial decisions you will continue to make for the rest of your life.
What is one piece of information you wish you had known as a graduate entering the workforce?
Pay yourself first! Save for your future first and then budget for your lifestyle and expenses. How you use your paycheck determines your financial wellness. The easiest way to get into the savings habit is to set an automatic deposit into your savings account with each paycheck. Many times when you complete your employee onboarding you can delegate multiple accounts that your paycheck can be deposited into. Do yourself a favor and set aside a certain amount each paycheck that goes right into that savings account.
How does the payment of student loans play into financial planning for recent graduates?
This is a very popular topic for today’s graduates and our society to find a way to help those struggling with high student loan balances. Before you graduate be sure you fully understand the repayment terms of your loan, such as when the grace period ends. Talk to a representative who services your loan to see what repayment options there are. For example, some lenders will give you a small break if you set up an auto-payment. Once you know the plan for loan repayment you can enter this amount in your budget going forward. A few companies may even offer employee benefits such as money towards student loan payments, though only about 3 percent of companies currently offer this benefit. It is something worth looking into with any potential employers.
Can you offer any financial management advice for current Elon students?
Start educating yourself on how to have good financial habits so you do not fall into bad habits once income starts rolling in. Talk to a financial planner, read financial blogs and familiarize yourself with the resources available to you.
Kyle Lubinsky ’17 contributed to this story.
Investment advisory services offered through Equita Financial Network, Inc. (“Equita”). Equita also markets investment advisory services under the name Method Financial Planning, LLC. The foregoing content reflects the opinions of the author(s) and is subject to change at any time without notice.
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