financial literacy
BY DARYL HANNAH
Are You a Young Investor?
Take Control of Your
Financial Future
A shaky economy usually prompts
Americans to tighten up their spending and
hoard cash for the potential rainy days. But
for many young professionals, these traditional
savings methods aren’t enough. Nowadays, many
from Generation Y are taking their financial planning one step further, turning to employee-benefit
programs such as 401(k)s, flexible-spending accounts
and health-savings accounts to sew up cash for the
unknown future.
“A lot of young people are conflicted with where
their money is going, and many are taking advantage
of pre-tax dollars and putting money in the 401(k),”
says Anthony Hernandez, a vice president and financial consultant with Charles Schwab. “Young people
now are looking at their employers and their potential
employers for situations where their employers will
match 401(k) contributions.”
But what if you are from a culture that
traditionally lacks financial literacy? Or what if
you come from a culture that doesn’t trust banks?
Alma Morales Riojas, national president and CEO of
MANA, A National Latina Organization, says start
saving little by little. “We encourage people to start
putting money away out of every paycheck, no matter
how small, and then you can look at other investing
programs,” she suggests.
While there is certainly no foolproof way to survive an economic downturn, there are some strategies
to help you build a strong financial future.
1Assess Your Spending
The best way to better your spending habits is
to know what you are spending money on. Look
at your goals and life events, assets and liabilities,
past strategies and centers of influence as a starting
point. “Assessing your spending is paramount,” says
Hernandez. “We try to create opportunities to redirect
dollars that are being used to pay something and
direct those toward a savings or investment vehicle.”
How do you assess your habits? It’s as simple as
making a list. Write down every purchase you make
and, after a month, look at what you’ve spent money
on. You will probably find that you have wasted a lot
of money on unnecessary purchases.
2Start Reading
Reading financial publications and web sites
is key to understanding what’s happening in the
financial industry, which has a direct impact on your
personal finances, as evidenced by the subprime-mortgage debacle.
“Understand why you are investing and the
expectations and the different investment vehicles,”
advises Hernandez.
3Set a Goal
Keep your end-goal in mind. Setting a goal not
only gives you something to work toward, it’s also
a great way to shake unhealthy spending habits. “If
