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    what to know about finances when starting out

    No one leaves school with all the knowledge they’ll ever need, especially when it comes to finances. The skills required to manage debt and personal finances are simple to master, but can be tough to put into practice.

    In its new Ask the Expert series, Cashay reporters connect with experts on vexing personal finance topics surrounding all of life’s milestones: Education, marriage, parenthood, divorce, and even death.

    Stephanie Asymkos connected with Tess Zigo, certified financial planner and financial advisor with Waddell & Reed. She’s an Illinois-based advisor who specializes in helping younger individuals plan their financial lives and ensure they set themselves up for success. Here’s her advice for making financial moves when you’re first starting out.

    “It’s about doing the best you can with what you’ve got,” said Tess Zigo, certified financial planner when asked about her best financial advice for young adults. (Photo: Getty)

    What are some financial mistakes to avoid when starting out?

    The biggest mistake young professionals can make is the “paradox of choice.” Basically, the whole concept is the more choices we have, the more overwhelming it can be to make a decision.

    Think about the thousands of different mutual funds that are available out there and the hundreds of different investment platforms that we now have access to. Those things are great because they give us more options as consumers. But they’re also not good in the sense that young professionals today have so many more options that they just freeze because they don’t know what to choose so they just end up not doing anything.

    It’s like walking through the aisle at the grocery store now there are hundreds of different jams, for example. So, as a consumer, it’s frustrating and overwhelming.

    What should young professionals know about saving and spending?

    My personal opinion is that they really need to consult with somebody who works in the field. To me, it pays to actually get advice early on. There are affordable ways to do it, even pro bono financial planning.

    The most important thing early on is to really get a handle on cash flow and budget. It’s the tried and true boring stuff and that’s going to apply to everybody. You have to know how much money is coming in after taxes and you have to know how much money is going out the door every month. Ultimately, you don’t want to just balance, right? You want to be able to pay off your bills and then have some left over.

    For people in their 30s who didn’t get an opportunity to start saving, what first steps could they take for investing?

    <img alt=”The biggest mistake young professionals can make is the Paradox of Choice, Zigo said. (Photo: Getty)” src=”https://s.yimg.com/ny/api/res/1.2/5IOo2pLkCgecm4RWHM8bfg–/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MA–/https://s.yimg.com/os/creatr-uploaded-images/2021-03/829b6050-7c54-11eb-9f3f-be6f6c860bc8″ class=”caas-img”>

    The biggest mistake young professionals can make is the “paradox of choice,” Zigo said. (Photo: Getty)

    A lot of professionals don’t get out of school until they’re in their late 20s to 30s, so there are reasons why certain individuals cannot invest until 30 and that’s totally okay. It’s about doing the best you can with what you’ve got. There’s no point regretting the past, and just do the best you can going forward.

    By your 30s, if you haven’t started saving and investing for your future, you absolutely need to start. Compound interest is your best friend when it comes to saving and investing. If you wait for your 40s, you’re going to have to save a lot more than you would have saved in your 30s.

    There’s a lot of focus on budgeting and spending from other experts, but I think they’re forgetting to mention that you also need to be super focused on how much money you make. You need to always be growing your top line, which is how much you’re bringing in or your gross income. Ultimately, you can only cut spending so much. You have to make more money over time. That’s just how it is if you want to get ahead financially.

    What’s your advice about post-pandemic splurging?

    We live in a society where instant gratification is all around us, and I think social media makes it worse because then we see everybody living their best life and we want that.

    The question you have to ask yourself is: Is my financial stability worth the splurge? Because if you’re going to concerts you can’t afford, then you’re going to be paying for it and suffer in the future. So you have to make a choice.

    Ultimately that’s a personal choice because some people don’t care about their financial stability and financial security enough to make the hard decisions today.

    For someone who recently left undergrad or graduate school with a lot of student loans, what steps should they take for paying them back?

    <img alt=”Tonius Louie, 34, of Hollywood, now a grad student, with some of her books and degrees she has earned while racking up a $70,000 debt in school loans. (Photo by David Bohrer/Los Angeles Times via Getty Images)” src=”https://s.yimg.com/ny/api/res/1.2/A7CWl0LQ8sLJG9yFGQgKdw–/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MA–/https://s.yimg.com/os/creatr-uploaded-images/2021-03/d89fa3d0-7c54-11eb-a3d3-ecb83fbbff1e” class=”caas-img”>

    Tonius Louie, 34, of Hollywood, now a grad student, with some of her books and degrees she has earned while racking up a $70,000 debt in school loans. (Photo by David Bohrer/Los Angeles Times via Getty Images)

    When you come out of school and you have $200,000 in student loans and you only make $100,000, you need to consult with a student loan planner or someone with the designation of certified student loan planner (CSLP).

    A lot of people choose the wrong repayment program, and that’s why they get caught in the cycle of not being able to keep up with the payments, not having a strategy. You need a strategy and a plan to pay those off.

    What makes sense for one person, unfortunately, doesn’t make sense for another person. That’s where things go really wrong because people talk with friends and find out a friend is on one repayment program, so they do that, too.

    You’re not gonna take health advice from your neighbor, right? You’re gonna go to your doctor and they’re gonna run tests and they’re going to tell you what’s going on. That’s the whole thing with personal finance. It doesn’t mean that that’s the best advice for you and your situation.

    What are tips for young people to prioritize saving?

    The sooner you can develop that discipline to think about not just today but tomorrow, the better. You have to balance what you want today with what you’re going to need five, 10, 15 years later.

    Time is on your side when you’re younger. The money that you invest in your 20s has more time to grow, so it’s even more important.

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