Five pieces of recession-proof financial advice for new graduates

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For the second time in a bit more than a decade, another crop of post-secondary graduates is entering the job market just as companies enact hiring freezes and layoffs in response to the ongoing economic malaise.

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As a parent of a new graduate, I understand the questions and concerns many young people have: What if I don’t land a well-paying job in my field? How will I make my rent or pay off my student loans? How will I save and invest for my future? I shared those same questions after graduating from university when my job offer was rescinded during a recession.

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But there is hope and opportunity even in times of economic shakiness. Here are a handful of tangible pieces of advice to help position new graduates for long-term financial and professional success while navigating current market conditions.

Learn and earn

Securing a job — any job (even if it is not your “dream” job) — is the critical first step for those seeking financial and professional success. A job will provide a source of income and it will introduce you to a professional network ripe with opportunities to build long-lasting connections and learn about different careers you have yet to explore.

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Although your first job out of college or university may not be your ideal job, every employment opportunity will teach you new skills and help you identify what you enjoy — and do not enjoy — doing at work.

Consider entertaining offers that may not be in your field of study in order to make professional connections, learn new skills and begin laying the foundations for financial independence. Gaining these skills and insights will allow you to focus your efforts on long-term goals and aspirations while making money and working towards the dream job that you will one day have.

Become financially literate: net worth thinking

If securing a job will make you money, becoming financially literate will help you keep it.

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Net worth thinking refers to having a complete understanding of your entire net worth: liabilities (such as student loans), savings and income. Start by writing down a spending plan to understand what you spend your money on (for example, subscriptions, entertainment, dining out, etc.) and what changes you can make to better align these with your values and long-term goals.

A spending plan will not make you wealthy overnight, but it will help you assign a task for each dollar you make, identify where and how you can save, and — most importantly — build invaluable money habits critical for long-term financial independence and wealth building.

Gone are the days when money was an off-limit topic, so you can have open conversations about money with family and friends. Money is not a dirty word and speaking about it does not have to be invasive or uncomfortable. Asking those whom you trust how they made and managed their money will be helpful when tailoring your own plan.

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Invest in yourself

One of the best decisions you can make as a new graduate is to continue investing in yourself. By developing a hobby, joining a book club, participating in team sports or volunteering, you will gain skills, knowledge and a network to complement your education. These opportunities will diversify your personal and professional network, increasing your visibility to potential connections and employers.

Save, invest and strategize

As you stick to your spending plan and establish healthy financial habits, it is important to save money with the goal of having an emergency fund to cover three to six months of expenses. Saving 10 per cent of your paycheque for this would be ideal, but any amount — no matter how small — is a terrific start.

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Take your savings to the next level by exploring all the benefits your job provides. From work-from-home subsidies to retirement, health and wellness benefits, don’t leave free money on the table.

It is also important to consider the potential return on investment compared to the interest rate on your debt when weighing the option to pay down debt (such as student loans, credit cards, etc.) or invest. For example, if you have student loans, find out the interest rate on them and if there has been any change. This information will help inform your plan to pay it off.

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Investing the money you’ve saved will grow your net worth over time. Familiarize yourself with the power of compound interest and a long-term investment horizon to understand the benefits of investing early and often, no matter the amount.

Remember this, too, will pass

Economic downturns and recessions are difficult to navigate, especially for young graduates, but they’re also cyclical. This means the current situation will pass with time and if you start now and set tangible goals, a world of opportunity will present itself.

Susan O’Brien is a wealth adviser at Richardson Wealth.

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