Financial Tips for Young Professionals

For Sara R., pursuing a degree while working full-time and parenting four children (twins Kingston and Olivia, 10, Grayson, 7, Hudson, 3), required commitment and sacrifices.

Sara, now 38, is a BECU senior program manager. She attended a self-paced online school, Western Governors University, and spent late nights writing papers, early mornings studying and weekend mornings doing homework at a local coffee shop.

Career Development

As tough as it has been to juggle a full-time job, family and school, it was worth it financially to Sara. She used BECU's employee tuition reimbursement program to pay for school, so she was able to continue earning her salary and not take on student loan debt.

Her goal is to accelerate her career and increase her earning potential while also focusing on the financial well-being of BECU's members and communities.

"By leveraging BECU's employee tuition reimbursement program and being a good steward of our members' money, I swiftly completed my undergrad and graduate degrees," she said. She now has a Bachelor of Science in business management, a Master of Science in management and leadership and a Master of Business Administration.

"This dedication to continuing education opened doors and opportunities, introduced me to new people and experiences, and increased my earning potential."

After getting a bachelor's degree, Ryan worked in accounting for several years before taking the CPA exams.

"Several years after that, I pursued my MBA," Ryan said. "I could engage with the subject matter and enjoy learning because I had real-world job experience that I could relate the material to."

If he had pursued his degrees immediately after completing his undergrad degree, Ryan doesn't think he would have gotten nearly as much out of the experience.

"I would have probably had student loans to pay off, and I'd not necessarily have gotten a better job right out of school," Ryan said.

Although higher pay statistically accompanies higher education, it's not a sure thing.

Career Investment Tips

Sarah suggested other ways to invest in your career that are low or no-cost:

• Watch YouTube videos on specialized topics for your field and general professional skill building, such as communication and leadership.
• Follow positive influencers on social media who offer tips that are relevant to your work and aspirations.
• Volunteer by serving on a board of directors to build leadership skills, expand your network and fulfill your sense of purpose.
• Join work employee resource groups for networking, skill building and increasing social and cultural awareness.
• Help coordinate workplace events, whether company-wide or within your department, to build communication and leadership skills.

Balance Debt and Saving: One Strategy

According to an analysis by the St. Louis Federal Reserve, a significant proportion of Gen Z (7.8%) and millennial (7.1%) borrowers had student loan balances of over $50,000. Gen Z are more likely to hold student debt and have higher balances.

So, it's no surprise that Sarah's top goal when starting her career was paying off her 7.5% interest rate student loan with a monthly payment of $250. "Any windfall or side-job income went toward my student loan as long as there wasn't a more immediate expense I needed to cover."

Then, Sarah evolved debt repayment and savings strategies based on income, windfall income and immediate and long-term needs.

"I regularly reevaluate where I am and what I need to focus on for savings versus spending, including my goals and needs, then figure out how to get there," Sarah said.

So even as she paid off her loan, Sarah's first savings goal focused on saving for six months of expenses to cover any possible layoff or unemployment period.

"I started small because I still wanted to have fun, but I was sure to put something away each month toward my six months of savings. I created different savings accounts for each specific purpose," she said. "They didn't drive much interest income, but my goal was to leave the money alone. If I could have done both, I would have, but interest rates were low. Segmenting the savings lowered my temptation to spend it."

Then, Sarah began planning for retirement by opening a 401(k) when offered by an employer and maxing out the match.

Finally, Sarah focused her savings on big purchases, such as buying her first home in 2017. After a few years of building equity in the home, she could get the private mortgage insurance dropped and potentially get a lower interest rate loan.

She can allocate the money she saves on no longer paying PMI to boosting her savings and paying off other debt.

Follow a Budget

Financial insecurity is a concern among many young professionals. Three out of 10 Gen Zs and Millennials don't feel financially secure, according to a 2024 Deloitte survey of young professionals, while 56% of Gen Zs and 55% of Millennials live paycheck-to-paycheck.

For his budgeting, Ryan uses an app that uses the zero-based budgeting method. With this method, "you give every dollar a job," Ryan explained. "If you overspend in one category, you must take it from another. This type of budgeting also helps you prioritize savings and investing."

"Not all budget apps are created equal," Ryan said. "Many popular ones just track and categorize your expenses and are far more reactionary than proactive."

Ryan's preferred app is the You Need a Budget app, which "has been one of the most valuable aspects of my financial health."

Ryan equates his budget categories to envelopes — one for charitable donations and others for long-term savings goals, such as retirement and his kids' 529 education savings plans.

Ryan tries to make sure every dollar of his income is being put to its best use: "Envelope budgeting forces you to tell your money what to do."

Save for Retirement

As of the most recent data, about half of Millennials, ages 24 to 39, owned at least one type of retirement account. Less than 8% of Gen Z, ages 15 to 23, owned a retirement account, but these numbers echo past statistics. Few Millennials had accounts in the past as well, then opened and contributed to retirement accounts as they grew older and gained labor market experience.

Sara currently contributes 17% of her paycheck to her 401(k), which she built up to very slowly over time. She started at 6% to take advantage of the match benefit.

"A colleague told me that he always upped his contribution in March, when BECU pays annual merit increases, so it doesn't feel as impactful. You pay yourself first," Sara said. "I adopted that habit and increased it by 1-2% each year to see if I noticed the difference. I don't miss the money I don't see."

In the past few years, Sara worked with a financial advisor who suggested increasing her contribution to gauge comfort. "If it didn't work for me, I could lower my contribution easily," she said. "I've kept it at 17% and make sure a large percentage of any bonus goes into it, too. My goal is to consistently max out the contribution limit while I'm able."

Even as she's modeling a return to school for her children, Sara leans on lessons from her father, who raised her as a single parent. "He worked very hard for all he had," she said. "He didn't teach me much about money, but he always emphasized the importance of saving for the future."

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