No More Mac 'n Cheese!. Lise Andreana

that to an oil company, be prepared to back it up with how this can help the oil industry and your prospective employer improve its public image and give it a competitive advantage.

      Many community service groups offer professional résumé-writing programs. Take advantage of the help available in your community.

      2. Decide What You Want from the Employer

      If you are lucky, you may be offered two positions (or more) and have to choose between them. How do you make the best choice? You will need to consider the following:

      • How much you will be paid.

      • How secure the position is (e.g., permanent, contract, or temporary).

      • How your income will change over time. How often are employees evaluated and how quickly are new hires promoted?

      • What the opportunities for advancement include. For example, a small employer may offer few chances for advancement whereas a large employer may have a history of promoting internally from the mail room to the executive suite.

      • What type of benefits are offered and when they begin (e.g., health, dental, and life and disability insurance).

      Consider the locational advantage as well. A locational advantage exists where a position offers the same pay scale across the country. Many social service or government positions offer similar pay scales, regardless of location. Teachers, nurses, and law enforcement officers fall into this category; even your mail delivery person. When applying for these positions, you may want to consider applying in smaller cities and towns where the cost of housing is lower. If you consider that the cost of living in a large city can be thousands of dollars more each and every year, the same professional living in a smaller town has a distinct and measurable locational advantage; the professional living in a small town will have more cash in his or her pocket. This person is then in a better position to pay down student loans; buy a vehicle or big screen TV; purchase a home; or simply enjoy a better lifestyle. Consider what additional cost will be incurred or saved by accepting a position.

      When making your decision to accept a position, consider the size of employer. Small firms, including family-run companies, may be more nimble and offer more opportunities for making your personal mark but lack internal growth opportunities and offer fewer benefits. Large employers will be more rigid, but they offer opportunities for advancement and generally have generous insurance plans including health and dental, and income replacement. They may also offer pension plans. Positions with government bodies are generally very rigid, but they tend to provide the greatest level of job security and generous benefit packages including health and dental and income insurance as well as pension plans. So how do you know which pay package offers the highest compensation? The following example will help you make a decision:

      • Job A offers a starting salary of $54,500 with no benefits.

      • Job B offers a starting salary of $45,000. Your benefits include savings to a retirement plan equal to 10 percent of your salary paid by your employer, as well as health and dental benefits (it is safe to assume the employer’s cost is 6 percent of salary). In addition, Job B offers sick pay in the event you have an accident or become too ill to work. You check the cost of purchasing a long-term disability insurance plan and discover the annual premiums would cost $2,500 if you had to purchase it on your own.

      Let’s compare the two jobs in Sample 2.

       Sample 2: Comparing a Job with Benefits versus a Job without Benefits

      Are you surprised? The total compensation package of Job B is higher than Job A. Do not underestimate the value of a benefits package. Be prepared to ask questions about benefit programs. Responsible employers are eager to offer competitive benefits. The benefits form an important part of your compensation, so consider their value before accepting competing positions.

      Now consider the impact of your employer making a 10 percent contribution to your retirement plan over a 25-year period. Assuming your income rises with inflation at a rate of 3 percent and the investments earn 7 percent annually, the value of your employer-paid nest egg would be approximately $400,000! Keep this in mind, think about your own personality, and ask yourself: “Would I save this on my own?”

      When choosing to leave a current employer for a new position, remember to add the value of your existing benefits to your current pay scale. Generally I do not advise my clients to make a switch unless the new employer’s offer is at least 20 percent higher. If the new position is with a small firm or a start-up without benefits, consider how much you will have to pay out of your pocket to duplicate your existing benefits. Now subtract this amount from the employer’s offer to see the true value of the compensation. The value of a benefits package can easily exceed 25 percent of the salary.

      5

      From Your Parents’ Basement to Your First Apartment

      * Read this if you are planning to leave the family nest in the next 6 to 36 months, and you are looking forward to being independent and having a place of your own.

      * Read this if you want to have a solid financial foundation as you embark on your own.

      If you put your time and money to good use while living at home with your parents, you will begin life as a self-sufficient adult. Living at home offers you the time to increase your savings for your first apartment and pay down a large portion of student debt. Whether your income is from part-time work or your first full-time position, you will never have more disposable income than while living in the family home. This provides the perfect opportunity to save for your move to financial self-reliance.

      If you are planning to move back into the family home, and you are working, offer to pay your parents a portion of your income toward the household operating costs. Paying your way is the first step to fiscal responsibility, and it will help you feel better about yourself. Tell your parents how long you expect to stay in the family home. Set a time limit for how long you will stay, and begin now to plan the steps you need to take to leave the family home for a place of your own.

      1. Begin with a Savings Plan

      Before you bolt out the door, you need to consider how much money you will need to get started. For example, landlords generally require a deposit equal to one or two months’ rent.

      Prudent financial wisdom recommends that you have an emergency fund equal to three to six months’ income. An emergency fund will help you to meet unexpected future costs such as the loss of a job, or an expensive vehicle repair. You will also likely need a few dollars to purchase furniture and other items for your new home.

      While you are still living in the family home, create a simple savings plan, which may look similar to this:

      • 30 percent of your (after tax) income to your apartment fund and emergency fund.

      • 30 percent toward your debt (student loans plus credit cards).

      • 40 percent (the remainder) for your transportation, cell phone, Internet, clothing, entertainment, vacations, etc.

      Now is the time to consider your starting point. What is the value of your assets? How much do you owe? The difference between these two numbers is your net worth.

      How much money do you earn each month? What are your fixed monthly expenses? What is remaining? A cash flow statement can be used to show this information and will indicate if there is a surplus or a shortfall.

      All of these topics will be explored in greater detail in Chapter 7, “Create a Budget”; and Chapter 8, “Calculate Your Net Worth.” After reading these chapters, you will be able to create a