Money Tips for New Workers

Money rain

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If you just started working at a new job, you’re likely very excited and a little nervous. That new job feeling has given you a spring in your step and you can’t wait for the day ahead.  However, it’s also important to pay special attention to your finances during this time. In part two of our interview, The Cheat Sheet spoke to Kate Ryan, a wealth management advisor at TIAA, to learn more about how to prepare your finances after getting a new job.

The Cheat Sheet: What advice do you have for new hires who are unsure of how to manage their personal finances? Where can they learn more about money management?

Kate Ryan: For most people just starting out, their main focus is on their cash flow so that they can grow the amount of money they have to manage. Building a budget will help them discover how much they can save, as well as identify areas in their expenses where they can cut down to save even more. It’s never too early to contact a financial advisor for assistance.

Understanding the myriad money questions that arise regarding debt, investing, planning for large purchases, and protecting assets is a lifelong learning process. A good financial advisor can help shorten your learning curve and give you the benefit of training and experience when it comes to money management and investing. There are very helpful tools provided on TIAA.org such as the Budget Worksheet, which provide helpful guidance to those looking to better manage their money.


CS:  How can new hires figure out the right number of tax deductions to claim?

KR: People often overlook the plethora of resources available to them. There are so many websites and books that help individuals achieve financial literacy—whether it’s about taxes, retirement or investing.


CS: Anything to add?

KR:

Be informed about health insurance. Doctors and medications aren’t cheap. If you plan on enrolling in a company-sponsored health insurance plan, ensure you’re making a well-informed decision. Evaluate your financial status and expected medical expenses for the year. Decide what type of plan best fits your needs. For example, a young, healthy employee who is less likely to require medical care should consider a low-premium, high-deductible plan, as this minimizes the monthly cost of having insurance. On the other hand, if you’re expecting to incur medical fees in the near future, consider a more robust coverage plan that includes a lower deductible.


Consider life insurance. Take this opportunity to review your new employer’s life insurance options. Typically, companies provide a base amount of coverage at no cost to you with the option to deduct from your salary on an after-tax basis for additional coverage. Depending on your needs and those of your family, additional coverage is usually available at a reasonable price without taking a medical exam.

Before taking out additional coverage, you should compare the cost of the additional life insurance coverage through your employer versus an individual policy that offers the same amount of coverage. Often, if a person is in good health, taking out their own personal life insurance policy is more cost effective than paying more to the employer policy. This is because the employer policy is usually based on a group health rating that takes the average health.

You should also check to see if the premiums for additional insurance through your employer options stays level. Often, it goes up each year a person gets older, and one of the benefits of choosing an individual policy is that the premium typically stays level. Therefore, even though an individual policy could be more expensive in the first couple of years, the overall cost in the long run may be less. Lastly, you should look into whether or not you can keep your life insurance through an employer’s group plan if you were to change employers. Most of the time you cannot, and one of the benefits of an individually owned policy is that you have full control over your plan and it stays in place regardless of your employer.


Build your emergency fund. This way you can fix your car when it breaks down and still pay rent! Establishing an emergency savings account is a critical part of your financial health, but it can be hard to find the money to build your fund. Don’t feel pressured to set aside large sums of money at a time. Making small contributions on a regular basis will help lessen the burden while steadily increasing your savings. To do this, take advantage of savings programs your company may offer. These might include gym membership reimbursements, movie or concert discount tickets, tuition reimbursement for educational courses, phone plan stipends, or other employee discounts. If you allocate the money you save from these programs to your emergency fund, you’ll be well-prepared in the event of a rainy day.

Read part one of our discussion here.

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