Tips for rookie professionals

One of the biggest challenges young people face in their first jobs is keeping everything in perspective. Having been poor students for what feels like a lifetime, the financial freedom of a regular paycheque can be intoxicating. The trick is to balance the need-to-dos, like getting rid of your student loans and setting up a household budget, with the want-to-dos: travel, fun with friends, and, yes, how about a new car!

Speaking of that student loan, for heaven’s sake don’t use the default repayment schedule or you’ll be paying that sucker off for almost 10 years and doubling (or worse) your schooling costs. Set a deadline for when you want to have that puppy gone, then make and follow your plan.

Saving for retirement might be the furthest thing from your mind, but establishing a pay-yourself-first plan is the first step to that trip around the world or that home in the country. And if using an RRSP also means saving on taxes then why not kill two birds with one stone? It doesn’t take a lot to start. If you’re in your 20’s, saving just 6% of your net monthly income will take you where you want to go. If you’ve got a company pension plan, sign up! Every year you delay joining is like taking a pass on free money.

To keep your investment pool growing, each time you get a raise allocate 10% of your newfound wealth to your investment program. Your savings will increase steadily even as you continue to improve your lifestyle. Since you’re young and starting out, you have what the financial world refers to as “a long-term investment horizon.” You have tons of time before you’re actually going to need the money. That means you have a wide variety of investment alternatives from which to choose when investing. Your schoolin’ days aren’t over just yet. Take some time to learn more about investing. The more return you earn, the earlier you’ll reach those goals you’ve set for yourself.

While you’re young and healthy, check out the rates for disability and life insurance. The plan at work may look good enough, but you may be surprised at what’s not covered. And if you leave your job–do you really think you’re a “lifer?”–you’ll lose your coverage and have to buy a new plan. Will you be young and healthy enough to even qualify? Since the definition of “disabled” is very important, get an expert to guide you. Buy your insurance early and you’ll benefit from significantly less expensive premiums, which you can then take advantage of for your entire working life.

Stepping out on your own brings some very interesting challenges. Take care of the details and you can face these challenges knowing you’ve got your bases covered.