get down to business Your first priority is
meeting the cost-of-living in your area, and
since the cost-of-living in some cities is
so high, you might be left with little to sup
port a high lifestyle Meet your fixed ex
penses (rent, electricity, fuel...) first, before
you set about spending any discretionary
income
"The first step in any financial planning
process is an awareness." counsels Hank
Madden, a Ponte Vedra Beach. Florida
financial planner with IDS Financial Serv
ices. Inc "An awareness immediately
places you In an elite group, starts you
early In the systematic, self- appointed and
disciplined accumulation process "
"One of the first things a new graduate
should do is set financial goals," offers
Nancy Anderson, a tax research and train
ing specialist for H & R Block "They should
know where they want to be down the road,
and begin thinking about how they want to
get there "
One way to get there is to establish a
budget, or financial work sheet, keeping
track of your needs and resources on a
monthly basis "I don't like the word
budget. " says Zito. "I like spending plan'
better To spend is a great pleasure, and the
thing that young workers need to realize is
just that if they choose to spend in one
area, then that will probably limit what they
can spend in another area So, if I choose
to have a $700 two-bedroom apartment
I might not be able to afford the $300
car payment"
Financial planner Elizabeth Lewin,
author of Vbur Personal Financial Fitness
Program, looks on a budget as nothing more
than a roadmap "It's just a way to keep
track of how money is flowing in and flow
ing out," she says, "so that you can have it
flow out to the things you really want instead
of it disappearing on things you don't care
about"
Lewin recommends being very spe
cific in your budget, rounding figures
upwards to the nearest ten dollars "I think
there should be very little miscellaneous
spending," she advises. “I think you should
try to know exactly where the money is
going, if only because it will show you
exactly what your real priorities are
“Keep good records, which isn't really
that hard There are only three ways of pay
ing for things-check, credit or cash Check
and credit card purchases give you auto
matic receipts, and you just have to remem
ber to file away your cash receipts."
One of the principal reasons for keep
ing a budget (other than making sure you
have enough money to pay your bills) is to
plan for future expenses and get you in the
habit of saving money. “I would say the first
thing any young worker has to think about
is a systematic savings program,” reports
William Droms, professor of finance at
Georgetown University's School of Busi
ness Administration. "It's a good idea to
adopt a pay-yourself-first plan Try to put
five percent of your take home pay, or what
ever you can afford, into your savings ac
count before you pay any of your bills."
The amount of money you save each
month, you'll find, is not as important as the
fact that you're saving "I don't think it mat
ters how much you start with," agrees Dun
nan “I think it's the habit Even if you’re
saving only $20 a month, do it That’s very
important It sounds like it won't amount to
much, and it probably won't, but establish
ing the habit is important."
Most financial planners advise saving
five percent of your take home pay to start,
bringing that up to 10 or 15 percent after a
few years out of school Of course, these
guidelines might not be right for you. and
you should adjust accordingly and stick to
whatever savings plan you find appropriate
The old dictum about spending no
more than one-quarter of your take home
pay on rent is no longer valid in most parts
of the country In some cities you might
have to spend as much as 40 to 50 percent
of your salary on living accommodations If
you find yourself in such a situation, don’t
panic You shouldn’t sacrifice comfort and
safety in your living situtation just to satisfy
an archaic formula; you might have to save
a little less than you'd like in order to get
by. but you'll manage (You might have to
start brown-bagging your lunch, or car
pooling with co-workers.)
"I think young workers will actually have
more money than they had in college," Dun
nan assesses. "At least more money going
through their pockets So, if they liked hav
ing imported beer in college, well, they can
probably still have it, but they have to budget
for it, and it might mean giving up some
thing else
“I don't think they should look at the
move into the working world as a depress
ing thing If you’re talking about buying
records, going to the movies, and eating
out now and then, I don't see that they’ll
really have to give up those things. What
they'll have to do is just watch closely what
they're spending and be able to cut the
things they really don't need."
MONEY IN
THE BANK
A penny saved is indeed a penny
earned, but there are almost as
many ways to save your pennies as
there are to earn them Now that we've got
you thinking about saving money, it's time
tor you to think about where you’ll put your
growing nest egg.
For most of you, interest-bearing
accounts with a bank or savings and loan
will loom as the safest and surest place to
keep your money. However, the standard
checking and passbook savings accounts
that were once the staple of banks every
where have now given way to new savings
plans designed to maximize your earning
potential
For those of you looking to open a
bank account for the first time in your lives,
we offer a broad look at some of the more
common interest-bearing accounts. As