Financial tips for young professionals

Today's young professionals face a future that's perhaps more puzzling than any generation of young people has encountered in decades. An economic stall that has carried on for half a decade coupled with an uncertain job market has made it difficult to anticipate what lies ahead.

Money management is a priority for the young professionals fortunate enough to have found steady employment in a difficult job market. However, many young professionals are unsure about managing their finances once they begin earning their first steady post-college paychecks. The following are a few basic financial tips for young professionals who want to make the most of their money in the years to come.

* Think retirement. It might be hard for young people who just started their professional careers to start thinking about retirement. But saving for retirement should begin the moment you accept your first job offer. If your company offers a 401(k) plan, enroll as soon as you're eligible (many companies do not allow new hires to enroll until they've completed a 90-day evaluation period). If you find a company that matches your contributions, that's even better. If the company does not offer a 401(k), then speak to your bank about opening an IRA, or individual retirement account, and set up automatic deposits into that account to coincide with each pay period.

* Don't go crazy with credit. Many 30-somethings have horror stories about overusing credit cards in their 20s and fighting to get out of debt for years. Don't fall into that trap. An entry-level position might not pay very well, but don't dig yourself into a hole by living above your means and financing such a lifestyle with credit. It's beneficial to sign up for a credit card once you start working full-time so you can start to establish a credit history that, if you use credit wisely, will help you down the road. But don't go crazy with credit. Instead, use credit cards sparingly and pay balances in full whenever possible.

* Open a savings account. It might sound simple, and it is, but open a savings account if you don't already have one. Many young professionals fail to open a savings account when they start working, as some may feel a retirement account such as those previously mentioned are enough for saving for the future, while others feel their checking account can double as a savings account. But neither of those approaches are correct. A checking account linked to a debit card means you'll routinely be dipping into your "savings account," while you incur steep penalties for using retirement money should you need to withdraw funds in the case of an emergency. A traditional savings account will earn you interest (many checking accounts do not), help you secure your financial future and ensure you have cash on hand in the case of an emergency.

* Start repaying your student loans. Young professionals with student loans to repay should begin repaying those loans as soon as possible. Many student loans afford borrowers a six-month, interest-free window after graduation during which no payments must be made. But when that six-month grace period expires, borrowers must begin repaying those loans or seek a deferment or forbearance. A deferment is a period during which repayment of your loan is temporarily delayed and, depending on the type of loan, the government may pay the interest that accrues during the deferment. A forbearance is for those borrowers who don't qualify for a deferment but still need to delay making payments. A forbearance can typically last as long as 12 months, but during that period interest will accrue on your loans and you will be responsible for paying that interest as well as the loan principle.

But young professionals should begin repaying their loans as soon as possible, and ideally pay more than the minimum each month to decrease the amount of interest paid over the life of the loan. Making loan payments each month helps build credit history, and the sooner a person starts repaying the sooner he or she will be free of the burden of monthly payments.

The economic climate many young people are now entering is certainly no walk in the park. But some simple financial strategies can help young professionals establish themselves financially regardless of how weak or strong the economy is.