It’s January—the holidays are behind us, and college students are back at it, hitting the books for their final semester. For seniors, the countdown to graduation is officially underway. While the focus is on finishing strong, now is also the time to start thinking about life after college—jobs, benefits, and financial independence. The transition from student to professional comes with important financial decisions, and being prepared can make all the difference.
Understanding employer benefits
Daniel S. Cook, CPA/CFP at Cook Financial Designs, Inc., emphasizes the importance of understanding and maximizing employer benefits. “When looking at potential employers, graduates should not only consider salary, paid vacations, and holidays, but also the benefits package offered,” he advises.
Key benefits include retirement plans, potential employer match or contributions, and if the plan offers pre-tax and Roth options. “For younger individuals, the Roth option is particularly attractive as it allows for tax-exempt growth over their lifetime,” says Cook. Other benefits could include Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA). FSAs provide pre-tax savings for medical expenses but must be used within the plan year, while HSAs offer long-term benefits without expiration. “HSAs are a great way to save for future medical expenses with the added advantage of tax savings,” he says.
Insurance and long-term planning
Life and disability insurance are essential considerations. “In addition to owning your own life insurance policy and disability policies which provide financial support in case of unforeseen injuries or illnesses, group life and disability coverage offered by employers can be very affordable and offer significant protection,” Cook says. Graduates should also think long-term, including about retirement planning and saving for major life events such as buying a home or starting a family. Prioritizing savings for significant future expenses can ensure financial stability and peace of mind.
Building a financial foundation
Establishing a solid financial foundation early is vital. Cook stresses the importance of budgeting, saving, and understanding tax implications. “Living within your means and learning to save are critical steps toward financial independence,” he says. Graduates should aim to balance their spending and savings, even with a modest salary. Seeking professional financial advice can also provide valuable guidance, especially for complex areas such as taxes, employer benefits, and investment strategies. Each financial foundation should also include estate documents, such as a will, financial power of attorney, and health power of attorney. Working with a trusted estate attorney is an integral part and should be pursued.
Advice for parents
Parents play a crucial role in guiding their children through this financial transition. Cook encourages ongoing discussions about financial responsibility and planning. “Parenting doesn’t stop when they walk across that stage. Continue to encourage your young adults to look at their financial options and seek professional advice,” he suggests. For parents who want to help their graduates get started, Cook recommends directing all or a portion of financial gifts they receive for graduation towards savings or necessary expenses rather than impulse purchases. “Establishing the discipline of saving is key. Encourage them to set aside a portion of any monetary gifts they receive,” he advises.
Assistance from Tidewater Jewish Foundation
Tidewater Jewish Foundation offers valuable resources and opportunities for young adults to learn about financial planning, charitable giving, and tax advantages. “TJF can help graduates and their families understand financial management and philanthropy,” says Cook. By setting up donor-advised funds or charitable donations through TJF, families and graduates can benefit from a tax perspective and instill a sense of community responsibility. “It’s about building a comprehensive financial strategy that includes saving, investing, and giving back to the community,” he says. Working with and through TJF, families and donors can identify worthy organizations and causes to support.
For more information, contact Naomi Limor Sedek at 757-965-6109 or nsedek@ujft.org.