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Tips for the young and broke at the start of careers

When I was in my early 20s, I was living in a mouse-infested apartment and counting every penny.

If you’re young and in a similar situation, let me tell you from experience: There’s hope! Your diet, one day, will include more than ramen noodle packs and you won’t have to snuggle up with a mouse at night.

But a better financial future takes effort and good advice.

  • Be realistic about student loans: Many students need to borrow money in order to pay for college. But Mark Kantrowitz, a student loan expert, said it’s imperative to keep that debt “in sync” with your potential income.

“Education debt may be good debt because it is an investment in your future, but too much of a good thing can hurt you,” he said.

His suggestion: Keep your total student loan debt to less than your projected annual salary after graduation. (You can find a number of salary estimator tools online.) Do so, and you will be able to repay your student loans in 10 years or less, Kantrowitz said.

If you borrow more, you’ll likely need an alternative repayment plan after college in order to afford your monthly student-loan bill, stretching your payments far in the future.

  • Think about your career early: You don’t have to decide on a career as a freshman, but it’s a good idea to start exploring the possibilities early, said Philip Gardner, director of the Collegiate Employment Research Institute at Michigan State University.

“Professional and academic development are now tightly intertwined,” he said. “So the transition into the workplace begins on day one in college.”

If you put off job-search steps — such as doing internships, attending career fairs and networking — getting work after graduation will be much more difficult.

  • Respect the dollar: You don’t have to be a miser like Ebenezer Scrooge, but you will work hard for the money you earn. Keeping tabs on how you spend those dollars will help you make the most of them, said Bonnie Sewell, a financial planner in Leesburg, Va.

“Every dollar counts and is counted,” she said.

  • Be disciplined: Saving — it is one of the most important things you can do when you’re young. By starting early and doing it regularly, you will form a habit that serves you for a lifetime.

You will also take advantage of compound interest.

“Expenses take from returns and our emotions make us buy high and sell low,” said Allan Roth, a financial planner in Colorado Springs. “Diversification helps us own everything rather than buying what’s ’hot,’ and discipline makes us rebalance to buy stocks when the market is down and sell when it’s up.”

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