Graduates need to set savings goals, experts say
By Linda Holmes
Staff Reporter
Save, save, save is the advice fi
nancial experts arc giving graduating
college seniors.
Lynn Roper, financial consultant
for Merrill Lynch Pierce Fenner &
Smith, Inc., said saving money is the
most essential habit for a college
graduate to have.
“The habit of saving money has
got to be started right away, every
time you get paid... instead of paying
everybody else and then not having
any left,” Roper said.
Graduates should set short-term,
medium-term and long-term saving
goals for themselves, Roper said.
Putting $10 into a savings account
every pay day, then increasing that
amount gradually, is a smart way to
start, she said.
Decide how much money you
want to have saved by a specific date,
she said.
Roper said graduates should put
money into a money market account
instead of a certificate of deposit
where it is locked up for months or
years. Roper said the money market
accounts are easier to access. One
guideline, Roper said, is to save three
months’ income in a liquid account
such as the money market in case of
emergency.
A medium-term goal is to pay off
student loans and any other debts such
as car loans or credit cards, she said.
Paying interest on credit-card
debts is poor financial management,
Roper said. Lenders look at a person’s
credit history, and they won’t lend
money to someone who has large
credit-card bills and is unable to pay
them off immediately, Roper said.
Society pushes everyone towards
debt, she said, but no one should use
a credit card unless he or she can pay
it off right away, she said.
Roper said long-term goals for a
graduate would include starting an
Individual Retirement Account and
saving money for a down-payment on
a house. Roper said down-payments
are usually 10 percent of the actual
price. The interest paid on a mortgage
for a house is the only interest that is
tax-deductible. Investing in a house is
impossible for most graduates for
more than three years, she said.
However, Roper said, paying off
debts is important before investing in
a house.
“Many, many, many people take
on all those debts at once and really
get bowled over, and then they actu
ally are married to their job and they
can’t move because they’ve got so
many debts,” she said.
People have much more freedom
when they gel out of debt and stay out
of debt, she said.
Graduates should start an IRA as
soon as they are through completing
short- and medium-term goals, Roper
said.
“The compound value of money
and time is fantastic,” she said. A
thousand dollars put into an IRA at 8
percent interest would accumulate to
more than $3,000 in 15 years, she
said.
Once a cash reserve is built, a
person may want to invest in riskier
investments like stocks and bonds,
she said. The safest equitable invest
ment is a mutual fund, she said.
Mutual funds rarely shift drastically
because they are controlled by a large
pool of investors.
Bud Cuca, vice president and
compliance director of Ameritas In
vestment Corp. in Lincoln, said
graduates should save $4,000 to
$5,(XX) depending on their standard of
living. After developing a savings
base, one should look at stocks.
Cuca said graduates who want to
research any mutual funds should
look at the Weisenberger Mutual
Fund Report, which gives a one-page
detailed story and investment objec
tives on every mutual fund available,
Cuca said.
He said graduates who marry right
away should save a little more money
than those who are single.
“The bottom line,” Cuca said, “is
that you have to assess what your
orientation towards risk is.”
Cuca said people have to decide
what their individual needs are. He
said college graduates usually don’t
have too many tax problems or safety
problems as those close to retirement
do.
Cuca said when people are a sav
ings base and are ready for frozen
assets they should think about certifi
cates of deposit, which have a higher
yield base than money markets.
Cuca said someone who isn’t dis
ciplined enough to save money in a
money market fund should consider
life insurance. Married people have a
moral obligation to have life insur
ance, he said.
The purpose of insurance is to
protect but most college graduates
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Renters should consider utilities, costs
APARTMENTS from Page 6
40 percent more.
Stall said tenants need to consider
utility costs. They need to find out
how much the utilities usually cost
and who will be paying for water,
electricity, gas and refuse service.
Bethel said usually landlords pay
for the water and refuse service and
renters are: responsible for electricity
and gas.
Stall said it’s important to check
out the heating costs before renting.
Stall said the gas company will re
lease information on how much it cost
to heat a certain address in past
months.
Before signing a lease, Stall said,
it’s a good idea to take an inventory of
the apartment to assess its condi
tion.
She said by having the landlord
and tenant sign the inventory, tenant
can protect their damage deposits.
She said a signed inventory can serve
as evidence in small-claims court.
The booklet also has many helpful
examples such as sample roommate
agreements, inventories and leases,
Stall said.
Stall said there are two types of
leases: term and month-to-month.
She said a tenant should try to avoid
signing a full-year lease or should try
to negotiate it down. She said prob
lems can arise if the tenant needs to
move out. If the landlord cannot find
anyone to move in, Stall said, he or
she could sue the tenant for the rent of
the months remaining on the lease.
Stall also said tenants should ask
the landlord to strike out any clauses
of the lease that they are uncomfort
able with. However, she said, anytime
a lease takes away tenant rights speci
fied in the- law, the state law will
prevail.
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