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Income and Careers

14 Big Ideas to Boost Financial Capacity

by Susan Sharkey, HSFPP Senior Director

Income and Careers

Dig the well before you are thirsty.

Chinese proverb

Having the foresight to intentionally act now in ways that boost future earning capability can put you on a path towards financial well-being. Proactive, purposeful planning also builds the capacity to prevail through the financial downturns that are bound to occur sometime during everyone’s work career. Consider these 14 Big Ideas when investing in your future self.

Education Investment

  1. Plan ahead for a career. Having a haphazard career and training plan — or no plan at all — can delay the potential for future career advances and income increases. Aim to take charge of your own future earlier rather than later by proactively planning to complete prerequisite courses or essential credentialing that gets you started on a career path.
  2. Consider education an essential investment throughout your work life. Gain new skills and sharpen existing skills to be “marketable” for ever-changing conditions. Pay attention and keep up to date on market needs and employment trends so you can adapt readily to job and career transitions.
  3. Be intentional with education choices. Establish must-have and nice-to-have criteria for circumstances that align to your values, lifestyle, financial means and career goals. Weigh the payoffs and tradeoffs of multiple solutions before making a commitment. Include consideration of on-the-job training, apprenticeship programs, military options, two-year college programs, university degrees, public and private schools, and employer-sponsored programs.
  4. Manage education costs. Your current income resources might not cover the additional expenditures for education. Take time to calculate what you can afford to pay for education and training. Select an option that realistically matches your financial means. Avoid taking on student loan debt if possible by first looking for funding sources that won’t need to be repaid. Invest time to apply for grants, scholarships or employer reimbursement programs to avoid the need to repay funds later. Streamline your living expenditures while dedicating resources to investing in yourself through skill training.

Employment Conditions

  1. Set criteria for acceptable employment. Similar to selecting education options, establish criteria for your preferred work conditions. Along with identifying preferences, clarify your deal breakers to weed out circumstances that are not worth pursuing.
  2. Jumpstart the journey. Lack of experience can be a barrier when starting a career or seeking a new job. Seek ways to creatively sharpen skills and gain experience, such as relevant volunteer work, internships and part-time or temporary jobs. Join professional associations to tune into industry issues and to connect with people in your desired field.
  3. Compare job offers. Consider more than pay when deciding whether or not to leave a current job or when faced with multiple job offers. Take into account the whole compensation package plus work conditions, work-related expenses, management style, company culture, location and the local cost of living. If you have the option to choose, assess whether or not the transition as a whole will enhance or impair your financial situation.
  4. Pay attention to your paycheck and benefits. When starting a new job, carefully read through the paperwork sooner rather than later to ensure you meet required enrollment deadlines. Take advantage of the convenience of auto deposit if that is an option. If an employer-based retirement savings plan is available, learn about your investing options to make informed, intentional decisions focused on long-term benefits. When filling out the W-4 form, use the Personal Allowance Worksheet and the Deductions and Adjustments Worksheet to withhold the correct amount of income tax from your paycheck. It’s most convenient to withhold accurate regular amounts each paycheck rather than paying a large amount at the end of the year. Reversely, withholding too much money reduces the earnings you could have on hand each payday to use for current expenditures, savings or investments.
  5. Know the rules. Be aware of state and federal labor laws that apply to your work circumstances to ensure that you (and your employer) are in compliance with requirements. Be aware of prescribed timelines and reporting requirements related to issues that may involve wages and hours, safety and health, and workers’ compensation.
  6. Pay attention to trends and outlook. Stay informed about local economic conditions, industry trends and your overall career outlook so you can proactively adapt to conditions that impact your income source.
  7. Weigh tradeoffs and payoffs of a move. When faced with a relocation decision, assess how your potential income will cover the living costs in the new location. A cost of living calculator can help you make comparisons.

Transition Management

  1. Plan for change in your work situation. When you see an income interruption coming, reduce your debt load, plan for adequate insurance coverage, and trim expenditures in preparation for an income drop. Fortify your network of personal references to provide support while seeking employment. Build up your skills. Regardless of the circumstances leading to the job change, attempt to leave with a positive or neutral relationship to coworkers. They can be your connection to new opportunities.
  2. Deal with down times. Know your bottom line for financial needs. Anticipate income shocks by setting aside money in advance. Make it a priority to build up an emergency reserve fund to cover at least three months of your typical expenditures in the event your income flow is interrupted. Consider additional sources of income from temporary or part-time employment or entrepreneurial ventures.
  3. LACE up (Listen-Ask-Confirm-Elaborate) if losing your job. Listen to the reason for termination; get final instructions about pay and any benefits. Ask for assistance to help transition to another job. Confirm final employee paperwork and verify that your final paycheck and W-2 form will be mailed to your correct address. Confirm logistics to take care of any retirement savings funds or pension benefits. If challenged to cover bills during the income interruption, elaborate and communicate with creditors to arrange alternate payment solutions.

Proactively planning for the inevitable career and job adjustments that will occur in everyone’s work life will put you in charge of your earning power. Additional strategies and tips for teens and young adults can be found in NEFE’s High School Financial Planning Program (Module 1: Earning Power), CashCourse resources (Working and Earning, Paying for College), and the 40 Money Management Tips for Every College Student Should Know publication, which are all available online.