Speaker 1: So, you just started your first job and there's a ton of financial steps that you now need to take. So, where do you get started? For tips, we're joined by Scott Gamm. He's a correspondent for The Street TV and also the author of More Money, Please. The Financial Secrets You Never Learned in School. I didn't learn any financial secrets in school. They should have financial secrets 101 in school, don't you think?

Speaker 2: Yes, it's really needed just so that this is not such an uncomfortable conversation when you get into your 20s and 30s.

Speaker 1: Totally. So, you get your first paycheck. You have a job finally, a little bit of independence. I don't think, I think most people think about how to spend the money, but not how to spend it responsibly. What are some of the things you should consider?

Speaker 2: So day one, you want to make sure you set up your 401k account at your job because a lot of young people overlook that and they end up going, you know, six months or a year or even longer without setting that up and that's money you're throwing out the door and you can go to your HR department, set that up. A lot of companies will offer a match. So this is money that's automatically taken out of your paycheck and transferred into that retirement account. So you don't, you're not even going to notice it and then you're forced to live off of the rest which obviously is a whole another story, but it's doable.

Speaker 1: You won't miss what you didn't, what you never, what you didn't realize that you had.

Speaker 2: Exactly. And the tax savings on 401ks are very helpful because again, you're contributing money that you have not paid taxes on. So by contributing more to your 401k, you're lowering your annual tax bill.

Speaker 1: And should you set up a budget?

Speaker 2: Absolutely. I mean, when you're first starting out, you want to take stock of, you know, how much money in student loans do you owe? What is the interest rate on each loan? Do you have any credit card debt from college, maybe from textbooks or from, you know, maybe vacations you should not have taken in college, but yet you did and now you're paying the debt from that. Obviously what is your rent, your food expenses, things like that. And hopefully there's some leftover for discretionary items.

Speaker 1: Yeah. You know, people never like to look at those numbers, you know, sort of like getting on the scale. You really don't want to know what that number is, but knowledge is power, right? That's the best way to navigate things. You mentioned student loans, 44 million Americans carry student loan debt, but there are options for you, including the possibility of a grace period. Can you explain that?

Speaker 2: Yeah. Well, basically, especially if you have government student loans, you can actually postpone when those payments are due. So let's say you graduate college and you don't immediately have a job, you know, you can have up to six months or in some cases longer to be able to repay, to start those payments. So it doesn't necessarily start right out of the gate that gives you a grace period to find a job and really get your financial house in order so that you can start throwing money to those student loans. Now when it comes to government student loans, you're, you're automatically lumped into what's called the standard repayment plan. This is a 10 year plan. So if you can't afford those payments, you can actually elongate that loan into a 25 year plan. It's called the extended repayment plan. Now the thing is, you're going to have a lower monthly payment, but you're going to pay more in interest over the life of the loan. So if you can stick to that standard repayment plan to get you out of debt as soon as possible.

Speaker 1: Right. Often people tell you as soon as you can start building good credit, you should get on it. A lot of people don't even know how to go about doing that. It's sort of a mystery, you know, credit other than like, Oh, get a credit card.

Speaker 2: Right. Well, it actually is that simple. As long as you have a credit card, you can start building credit. Now the bigger task is how do you get that credit card? Because as a young person, you don't have credit history. So what a lot of people do when they're starting out is they get a secured credit card. This is where you actually put money on the card, you put a deposit on that essentially access collateral. And so that's why it's much easier to get a secured credit card than a traditional credit card when you have no credit history because the lender says, Hey, well I had this collateral that if anything goes wrong, I can take from that.

Speaker 1: That's very smart. Yes. Yeah. And I don't know if it's still like this, but I remember when I was in college, there were credit card companies that targeted college students and you can get into a bit of trouble if you don't know how to handle credit.

Speaker 2: Yes. I mean, they were giving out these credit cards like candy now, thanks to some federal laws. It's a little bit harder for the credit card companies to approach young people. But that said, credit cards are not evil. You need them to build credit. Think of a credit card as a tool, not, you know, as just a way to spend more money.

Speaker 1: Right. That is so smart. All right. I got my first job. I'm going to get my first apartment, the apartment of my dreams. What are some of the things to consider?

Speaker 2: Well, yeah. I mean, a lot of young people I would imagine are going to be splitting their apartment with someone else. So that is a good thing to do out of the gate because, you know, you're going to split the rent. Maybe you'll split the broker's fee in terms of getting that apartment. A lot of apartments, especially here in New York City, will have a broker's fee that could be a few thousand dollars. And if you can try to get a no fee apartment, that's where you move right in and there are no broker fees are a little bit harder to find, but they do exist out there. You know, you may also be splitting groceries, the cable bill, the phone bill, things like that, Internet. So definitely look to roommates as an option. And then I also think you want to make sure that you get a co-signer because a lot of times a building, a lender won't give you that apartment unless you have either a parent or someone who's making more money co-signed for you. And then with that, obviously you have to make sure you make the payments because if you don't make the payments, your co-signer will be on the hook for that.

Speaker 1: I remember when I first started working, you know, my parents would tell me it's time to start a savings account and you would hear you need at least three months savings. And it seemed just unbelievable to me that I would be able to save three months of the money that I would need. But there are ways.

Speaker 2: Well, look, it's hard, especially when you're a young person and you have rent, student loans, credit card debt, you're trying to contribute to that 401k and you're asking a lot here. What's left over. But another good rule of thumb is if you do get an annual bonus, these are taxed heavily. So it's not the greatest thing, but it is something. Throw that entire bonus into a savings account. Don't spend it. Act as if it's a bonus, which it is. Don't think of it as more income than you can tap to to go on vacation or do things like that. The first couple of years are going to be hard. But you know, when you're in your mid twenties, early thirties, as you get older, more established, you're going to be thankful that you took the right steps when you were younger.

Speaker 1: It's such a short period of time.

Speaker 2: You can get through it.

Speaker 1: You can, you can. That is great advice. And it's great to start early with really good habits. And then, you know what? It's just sort of the way you live your life, right?

Speaker 2: Start early.

Speaker 1: You're going to thank yourself.

Speaker 2: Scott Gamm, thank you so much. Thank you. Brought to you by Bright House Financial, established by MetLife.