By Alanna Klapp
Financial challenges affect all ages. College graduates employed
at entry-level jobs are now saddled with 1.2 trillion dollars in out-
standing student loans. The typical U.S. household, while earning
an average salary of $60K per year, is faced with credit card debt,
student loans, and an overall lack of savings. Baby Boomers still
reeling from the impact of the Great Recession and wiped-out nest
eggs and retirement savings are now finding new ways to re-invent
themselves and extend their working years. Whichever your situa-
tion, Lynnette Khalfani-Cox, The Money Coach, has advice for you.
Her latest book, Perfect Credit: 7 Steps to a Great Credit Rating,
is a must-read for people who want to establish, fix, improve, or
maintain credit. Along with her sound financial advice, Lynnette’s
mission is to give people hope and inspiration. In a recent interview,
she shared that 99.9% of the time people can recover from things
that have gone wrong financially in their lives, whether it be a
mistake or an unforeseen event. “It’s not the end of the world,
it’s not fate, and it’s not a permanent financial death sentence,”
Khalfani-Cox explains. “It will get better if you take some steps.”
Here she shares a few of the steps below.
For the Recently Employed College Graduate
• Be realistic about starting salaries and expenses, including
student loans. A huge pitfall college grads face is overestimating
starting salaries and underestimating expenses once they get into
the real world. Take a hard look at your student loans and create
a strategic payoff plan that’s done as quickly as possible. Don’t wait
to start aggressively paying off student loans. Double the minimum
payments if you can afford it, or add to the minimum monthly payment.
• Keep the spending in check. Make some sacrifices to be able to
put more money towards student loans. Don’t be ashamed to tell
your friends you can’t afford a trip or a dinner out. “You can’t say
yes to everything because you don’t have an infinite amount of
money,” Lynnette says.
• Start saving and investing now. Save something rather than
nothing, even if it’s just $25 a paycheck. You’ll develop disci-
pline and over time, even small amounts of money can amass
and become large sums because of the power of compounded
interest. Make sure to take advantage of your employer-
sponsored retirement savings plan, such as a 401K or a
For the Working Joe and/or Jane with Kids
• Avoid the credit card debt trap. If you’re in credit card debt,
create a strategic payoff plan.
• Regular savings is critical. Lynnette recommends three types
of savings accounts for working moms and dads:
1. Rainy day fund: cash needed for one-time, unforeseen events
such as the car or the washing machine breaking down.
2. Emergency fund: enough cash on hand to cover your living
expenses for 3-6 months in case of a long-term major life
disruption such as a job loss. For example, if your bills are
$2500 a month, you should have $7500 or more in this account.
3. College fund: such as a 529 plan, a state-sponsored college
savings vehicle where you can save money and invest in mutual
funds over time.
• Use financial windfalls properly. Set aside a portion of your
income tax refund to build any of the three funds above.
• Max out your retirement plan in 2014. Increase your contri-
butions gradually, add money back to your paycheck by adjusting
your tax withholdings at work, use your raise, and make sacrifices.
Scale back eating out and look at savvy ways to cut costs.
For the Baby Boomer
• Rethink the impact of adult children and grandchildren on
your finances. Don’t be a victim of a financially abusive relation-
ship, which occurs anytime someone you know, trust, or love
takes economic advantage of you.
• Plan for things that can wipe out retirement savings, such
as an accident, illness, or an aging parent’s expenses. Health
and disability insurance can be helpful here.
• Make sure you have a will. Direct and protect your assets.
Name a guardian or custodian if you have minor-age children.
An award-winning financial news journalist, sought
after financial expert and radio personality, Lynnette
Khalfani-Cox has appeared on such national TV pro-
grams as The Oprah Winfrey Show, Dr. Phil, Good
Morning America and Dr. Oz sharing her success
story and teaching millions about proper money
management and how to get out of debt and
eliminate their debt.
Also known as The Money Coach®, Lynnette has
authored numerous books, including the New York
Times bestseller Zero Debt: The Ultimate Guide to
Financial Freedom. Her latest book, Perfect Credit:
7 Steps to a Great Credit Rating, is a must-read
for people who want to establish, fix, improve, or
maintain credit. She’s currently working on her next
book, due out later this year, on how to save for a
college education without going broke.