Experts: Spend less, save more

By John McDermott

With the country officially in the midst of a recession and the automobile industry on the verge of being the latest victim of the struggling economy, University students soon to enter the job market are seeking advice on how to secure their financial futures.

Financial and economic professionals advocate education, savings, a strong resume and experience in their desired field as keys to a successful career and a secure financial base.

But with few students having the disposal income necessary for investing, generating savings should be a more immediate goal, said Susan Taylor, University Extension educator.

Before they begin to invest, Taylor said that students should first establish an emergency fund for circumstances such as flat tires or a towed car. Emergency savings should equal between three and six months of a student’s living expenses.

After establishing a sufficient amount of emergency savings, students should begin putting away $25 to $50 per month depending on their income, Taylor said. One way to increase savings is to eliminate unnecessary spending. Taylor suggests students track their spending for one month and then adjust their spending patterns based on the results.

“If you keep track of what you are spending your money on and look back at it at the end of the month … you can find black holes in your budget,” Taylor said.

Taylor said alcohol, parking fines, entertainment purchases, sorority and fraternity fees, registered students organization fees and transportation are the most common extraneous expenses among students.

For James Blaha, certified public accountant and founder of JFB Realty in River Forest, Ill., a well-paying job is the primary component to financial security.

“The single greatest asset students have is their ability to generate income, not their savings,” Blaha said. “(A student’s) focus now should be on a career path that will help (them) generate a consistent income for (their) next 50 working years.”

With jobs in all fields being cut and the job market becoming more competitive, Blaha also stressed the importance of resume building and experience. If financially feasible, finding an internship or job is essential, regardless of the pay.

But even more important is approaching your job search with tenacity.

“Most important when it comes to job searching is to be as aggressive as possible,” Blaha said. “There are good jobs out there, but they won’t find you; you must find them.”

While some emphasize experience in your desired field, others believe that with the economy shrinking, now is a great time to explore alternative career choices.

For George Pennacchi, finance professor at the University, participating in socially beneficial organizations such as Teach For America or the Peace Corps are viable options with the job market being so limited.

“I would be open to taking a non-traditional position, at least for a few years, that would enhance one’s overall development and potential marketability,” Pennacchi said. “You’ll develop some new insights on the world. Then when the job market improves, you can go back to a more traditional position.”

However, students’ highest priority should be to invest in themselves through their education.

“Get the best grades possible, first,” Blaha said. “Getting a law degree or a master’s degree is more valuable in the job market than gaining job experience in your early 20s.”

After that, the plan is simple.

“Avoid debt, save more, diversify,” Pennacchi said.