Tips for Beginning Investors -
1) Develop a Safety Fund
a) Safety Funds are usually around 3-6 months of your current expenses
b) Get into the habit of borrowing from yourself rather than using a credit card
2) Build Your Credit Score
a) Set up a credit card, if you haven't already, limit your use and pay off your balance each month.
b) Avoid unnecessary credit checks
c) Sign up for a credit monitoring service through one of your credit card companies. These help you with more tips on building, maintaining and tracking your credit.
3) Refinance High Interest Rate Debt and be careful with Zero Interest Rate Programs
a) Look for ways to reduce your overall interest rate costs by shopping around for better interest rates on car loans, credit cards or personal loans.
i) Be careful using zero rate offers from credit card companies for balance transfers or on major purchases, for example, like promotional financing on your new furniture. If you use one of them, make sure you can pay off the entire balance following the promotional period and make timely payments.
ii) Personal loans generally offer better rates than credit cards and have a fixed payment, so if a zero rate balance transfer is not right for you, then seek out a personal loan with a lower rate than your credit card.
4) Participate in your employer benefits for retirement, insurance, and student loan assistance.
a) If your eligible, then use a student loan reimbursement program your company offers.
i) Look for possible changes in what is being offered to you in the next year.
b) If you can, maximize your contributions to a 401k/403b plan to the amount that is being matched by your employer to reach a savings rate of approx. 10-15% total.
ii) Consider any profit sharing, stock awards or options for this total. If you can and need to save more, then look to fund an IRA each year.
c) Employer benefits include insurance coverage. Not all life insurance benefits can be taken with you if you leave the company. If the life insurance does not cover all of your debts or potential lost wages and you want to carry the policy with you, then look into obtaining additional coverage like a 20-30 year term or a permanent insurance with cash value.
5) Open a brokerage account
a) Begin saving an amount with each paycheck.
b) Invest using dollar cost averaging into low cost index funds to begin building a diversified portfolio.
6) If your uncertain about how to coordinate your financial decisions into your plans for your goals, then seek out an advisor who is a fee only fiduciary like Bulldog Financial Planning. These advisors will work with you on your goals without representing anyone other than you.