Getting on the Right Road

Enter by the narrow gate; for wide is the gate and broad is the way that leads to destruction, and there are many who go in by it. Matthew 7:13

All roads are not equal, but there’s a right way and a wrong way with every decision we make. Added to that, the stakes are really high when you’re deciding what you’re going to do with your life.

I’m speaking to the graduates today, and I’m sure everyone is pumped after hearing those lofty commencement speeches. Now that the celebrations are over, this is where the rubber meets the road. It would be wonderful if every decision was as clear as the girl pictured here. It’s not, but here is an exercise that will help you get your financial road in focus and answer the question are you ready to live on your own. This will help you come up with Plan A. images

If you’re a graduate, you’re too young to remember the old Cosby Show when Theo said he didn’t need to get good grades because he could just get an ordinary job. Bill challenged him to live like he’d have to if he had an ordinary job. Things were exaggerated for comic effect, but the message was clear. Things are not as simple in the real world as young people think. Here is the exercise without the comedy.

Find a Job

The first step in this exercise is to see what’s available in your area (commuting distance) that you’re qualified for. An internet search is adequate for this effort, but if you know of a big business, search it specifically to see what’s offered. Take note of the qualifications required and the salary or wage. For the sake of this exercise we’ll assume you get the job, provided you’re qualified. This is a big assumption that probably won’t happen in real life. Do a little math and find out how much this job will pay you each month and deduct thirty percent. Why? Because that will be needed to account for deductions for taxes, insurance, retirement, and other fees you have no control over.

Find a Place to Live

Now that you know how much you’ll make, look for a place to live. This should cost no more than twenty-five percent of your after deduction pay (net income). Your residence doesn’t have to be a palace, but it should be safe, clean, and within commuting distance of your job. While you’re at it, take a deduction for a car or other transportation. Don’t forget gas and upkeep.

Prepare a Budget

Your budget should include all those living expenses we’ve discussed over the past months. If you don’t remember, go back through my blog posts. Is there enough money left to cover these expenses?

Assess Your Situation

Look at how much money is left at the end of the month. There should be enough for savings and investments. You have your future to think of. Do you have the type of residence you’d like? Vehicle? Is there any slack? You always need slack.

If you don’t like what you see, you’ll have to consider Plan B, and that may require getting more education, training, moving. Options are out there, but look ahead to where those options will take you.

Theo, from the Cosby Show, was only in Middle School when he had to do this exercise, and truthfully, that’s not too soon. I’ve already gotten my grandchildren to play this game. Now they understand how the real world works, they understand the importance of good grades and further education.

images (3)Keep in mind you may have to go on to Plan C because things don’t always work out the way you plan. There are more forks in the road than you might imagine. If you’re just starting out, you have an advantage. You don’t have mistakes to undo. That’s not true for most of us.

Most of us have to back up before we get on the right road, and one of the reasons we make bad decisions is because of attitude. That’s the topic for next week and it applies to us all.

 

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