May 23, 2011
The biggest money mistakes that young workers make
But as someone who entered her thirties with more credit card debt than annual income, I can tell you that the best time to take control of your finances is now. Trust me, your 30-year-old-self will thank you.
Kimberly Palmer, who figured out this whole money game early on, agrees. Her new book, Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back, is loaded with suggestions for young workers to get the most mileage from their paycheck. Following are three of the top money mistakes she sees young workers make:
Not negotiating the highest salary you can. Think you have no business haggling over salary and benefits in this economy? Not true. Employers not only expect you to negotiate, they'll respect you for doing so. Palmer offers these tips for would-be negotiators:
- Research competitive salaries in the field so you're informed.
- Practice negotiating before you receive any offers so you're not caught off guard.
- If the employer won't budget on salary, try negotiating vacation days, telecommuting, tuition funds, or other benefits important to you.
Spending faster than you can earn. Resist the urge to blow your first few paychecks on a new flatscreen TV or living room set, Palmer advises. It takes time to amass an apartment full of stuff (and often, far more time to pay it off), so pace yourself. Same goes for eating $15 lunches and $30 dinners out several times a week. Teach yourself to cook, invite friends over for weekly potlucks, and revel in the reduced stress of living within your means.
Not saving for emergencies, future goals, and retirement. No one wants to think about how they'll pay for a new transmission or unemployment -- until their car dies or they lose their job. Get into the habit of saving now, and coughing up the cash later to pay for life's little emergencies won't be quite so painful. Palmer offers these saving suggestions:
- Stockpile an emergency savings account containing at least three months' living expenses first. Then start saving for retirement, taking advantage of any 401(k) matching program your employer offers. Finally, use an after-tax savings account or money market fund to save for vacations and other big ticket items.
- Live simply, but save extravagantly. Palmer, a journalist, which is far from the highest-paid profession, saved a third of her income during her twenties. Here's how.
- If socking away even 5 percent of you income sounds daunting, start small, putting just 2 percent of each paycheck into a high-interest saving account or money market fund. As you get more comfortable with stashing your cash, gradually increase the percentage you save.
Karen Burns is the author of The Amazing Adventures of Working Girl, a career guide based on her 59 jobs over 40 years in 22 cities.
Kristen Fife is a senior recruiter, career mentor, blogger and resume consultant based in the Seattle area.
Lisa Quast is a certified career coach, mentor, business consultant, former corporate executive and author based in the Seattle area.
Randy Woods writes about job-search tools, networking techniques and other tips to help you land your dream job.
Matt Youngquist is the president of Career Horizons, a career counseling firm.
Natalie Singer is a Seattle writer, editor and small-business owner.
Michelle Goodman is the author of "My So-Called Freelance Life" and "The Anti 9-to-5 Guide."
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