From the Syms President’s Desk: 8 Things You Won’t Learn In College (But Are Absolutely Essential)
Disclaimer: I am 22 and have barely started my career as an adult. This is just a list of advice I have received over the last few years, and I am simply passing on the information to others in my own words.
1. Start Saving Now: The Power of the Roth IRA
Albert Einstein has taught us that the power of compounding interest is the eighth wonder of the world. While many of us don’t have much income to be saving up while in college, any penny you can spare can have a massive impact and potentially change your life. If you have any disposable income at all, go to your local bank and open a Roth IRA savings account. Every year, you can put up to $6,000 into an account — there is no minimum, so no pressure — that you can invest yourself or have someone manage it for you. You would keep this money in your account and add whenever you can. This account will ultimately continue to grow as you head towards your retirement, and when you hit the ripe age of 59.5, you can take out all of your money and not pay a cent of taxes. This works because the money you invest has already been taxed, so when you are in a lower bracket today, you will pay a much lower percentage now, and you can let the money multiply tax-free for the next 30 years!
If this idea sounds complicated, I just didn't explain it well enough. I made a simple Excel chart here to show you exactly what I mean. Every dollar in this account will make a difference, and every day you wait to open an account, the power of compounding interest decreases. Trust me on this one, this is an opportunity for everyone.
Another point: While you can’t take out your capital gains earnings until age 59.5, you can retrieve whatever you contribute. For example, if you put $6,000 into your account in 2020 and make $400 in profit, you can take out the $6,000 whenever you want, so long as you don't touch the $400 of earnings!
*Note* The only reason to not initially invest into your Roth IRA is if your employer offers to match a percentage of your 401k contribution. In that case, you should do that before contributing to a Roth IRA. The employer’s matching is essentially free money, so only after you max out the employer matching should you start putting your post-tax savings into a Roth IRA.
2. Start Using Your OWN Credit Card:
If you are using a debit card or still have a credit card tied to a parent’s account, you may be shooting yourself in the foot. While there may not be anything “wrong” with not using your own credit card, you are missing out on building up your credit score. What exactly is a credit score? Glad you asked. Your credit score is a number that is graded between 200-800 that shows creditors how good you are at paying off money that you owe. This essentially shows them how trustworthy you are; a higher score will help you out later in life.
If you want to lease a car, the dealer will ask to see a credit score. If you want to buy your first house, the bank will need a credit score report to see how much they can trust you and how risky it would be for them to give you a great mortgage rate. This means that a higher score will be less risky for them, and they will be able to give you better terms on a loan, which can save you tens of thousands of dollars!
So, why start with your own credit card? Credit cards are one of the easiest ways to start building your credit, just make sure you can pay off whatever you purchase in a timely manner. Over the years, if you are responsible, you should see your credit score rise, which will help you in the long run.
*Note* The issue with credit cards arises when you can't pay back what you owe, and you start to accrue debts that you pay interest on. Not only will this kill your credit score, but it will break your wallet as well. If you either won’t be able to pay back what you owe or don’t trust yourself to spend responsibly, maybe stick to a debit card until you feel ready to move to a credit card.
*Another note* I started with the Bank of America Student credit card and have had nothing but positive experiences, as well as some cool perks (3% cashback on dining, 2% back on gas and 1% on everything else).
3. How Much Should My Rent Be?
This one is not as straightforward, but I will tell you what I know. Usually, the rule is that 1/3 of your salary should be going toward rent. If you are making 60k out of school, you should be spending no more than 20k per year on your rent ($1,666 a month). However, this is not always possible for two reasons.
1. Not all of us are making enough money to do that.
2. Some of us live in extremely expensive cities, such as Manhattan, San Francisco and Boston.
So, what are the alternatives? First, when in doubt, find a roommate. A one-bedroom apartment may cost $1,500, while a two-bedroom place might be $2,200. This would mean that instead of paying $1,500 a month per person, you can save almost $5,000 per year and split costs of an apartment with a friend. No, this is not a brilliant answer, but there are some other tricks as well. You can find apartments offering a couple of months of free rent (especially during COVID-19) or find an apartment that someone is trying to sublease at a discounted rate. If you need to spend more than 1/3 of your base salary on rent, it isn’t the worst thing in the world, but do your best to keep the number down so you can save up!
4. I Took Accounting, but How Do I Actually Pay Taxes?
If your taxes are as simple as mine, this question is not a big deal at all. This year, I had some income from an internship and made a few bucks messing around on Robinhood. I used Turbotax as a guide and the entire process was not just free, but also extremely simple and quick.
That being said, if somehow you have a more complicated tax structure — some fancy investments or carry in a fund — then you may want to think about hiring a CPA. For the 99.99% of us that don't have anything wild going on in our accounts, using the basic, free Turbotax website will allow us to do our taxes without too much hassle.
*Note* I am very, very much not an accountant, so take what I have to say in this section with a grain of salt. For all actual accounting majors or CPAs, feel free to send me some more information!
5. Budgeting and Saving: It’s Nerdy, but It Helps
It could just be my OCD, but I like to keep everything cleanly mapped out. If I am planning an exciting vacation, you had better believe I will have a full excel spreadsheet with all of my estimated expenses ready to go. This also applies to my regular expenses. If you are always budgeting and planning, it becomes much easier to predict expenses. This means listing your rent, utilities, phone bill, wifi, groceries, transportation and a set budget for optional expenditures, like dining in restaurants and shopping. Make sure that you are spending a realistic and appropriate amount relative to your income.
Most wealth management advisors will tell young people to try to save 10% of their income every month. This number should grow to closer to 20% as you progress in your career and begin to earn more. Saving this money in a Roth IRA — see above — is a great way to make the most out of your savings. Additionally, for those of you who work on Wall Street, many say that you should use your base salary for living expenses and save that big bonus for a rainy day.
6. Efficient Networking: Don’t Be Afraid to Reach Out
I am not claiming to be a master at networking, but I have learned a thing or two about networking strategies over the last couple of years. When you start getting ready for the job search, you should have a set method for reaching out. First, start with reaching out to any family or friends who are in the field of your preference. These are the people who are usually the most helpful and usually are willing to help to any extent that they can. Next, you can reach out to school alumni or “friends of friends” or people with a similar background. After reaching out to anyone in those categories, only then does it make sense to start cold calling or emailing people that you do not know. Do not be afraid to reach out! ! The worst thing that can happen is getting a response that they are not interested, too busy or no response at all. The best-case scenario is you end up making a great connection and they take you on as a mentee, give you great advice and help connect you to more people. The risk vs. reward when it comes to networking is an amazing tradeoff, so don't be afraid to get your hands dirty.
Another important point, when it comes to networking, you should be as efficient as possible; there should be a method to the madness. Make an Excel spreadsheet with the name of every person you talk to. You should include a name, an email address/phone number, a quick summary of the discussion as well as the date you spoke and the date you sent a follow-up “thank you” email.
Tips and Tricks for Networking:
1. Read a message three times before sending, and if possible, have a friend look it over before hitting send. You would be amazed to know how often people catch spelling errors or punctuation mistakes.
2. Don’t put someone’s email address into the email until the message is ready. This helps avoid an accidental send-off in the middle of transcription.
3. Make sure you are sending the correct name to the right person! Yes, this actually happens pretty often when firing off 20 copies of the same email to 20 different people.
4. Become a pro at sending out calendar invitations; it will make it look like you know what you are doing.
5. Always have three to four questions ready to go, but only ask them if it comes up naturally in conversation. If they ask “do you have any questions for me?” the answer should always be yes!
6. Never burn bridges. Even if you absolutely bombed an interview, write a nice email thanking them for taking the time to meet with you. You have no idea when that person or company will pop up into your life again.
7. The Perfect Email: Short and to the Point
Let’s keep this section short and to the point:
In the business world, emails should be addressed to a first name; call him/her by their first name and not Mr./Ms. BigBank. This applies 99% of the time, except for emailing a CEO or someone incredibly formal. Also, don't use “Dear X” or “, Hey x”; finding the middle ground is your best bet.
Example of an appropriate email introduction :
I hope you had a nice weekend. We spoke last week regarding…
A few pointers:
1. Keep it short and simple. If you have to scroll down on an iPhone screen to read the email, it’s too long. Don't say, “I just wanted to know if ‘xyz,’” just ask the question!
2. See how I ended the last sentence with an exclamation point? Don’t do that in emails. We millenials/Gen Z get made fun of for overusing “!” in emails. You can use an exclamation point if you feel it is necessary, but please refrain from using them multiple times in an email.
3. If you are sending a resume to a recruiter, the proper terminology would be, “I have attached my resume below for your reference/convenience”.
4. Your emails reflect who you are as a person, so use spell check, reread them before sending, and please, for the love of G-d, don't use “texting language.” You are NOT an MD and you do not have the right to “pls fix, thx” anyone in the office.
8. Professional Etiquette: It’s Not Just for Professionals
Just some good “grown-up” rules I have heard:
1. When you first start in the office you should take it easy with bright colors, flashy belts or obnoxious shoes. Those can be reserved for the dates, but in the office try to keep it simple and conservative. No need to stand out like a sore thumb.
2. Try not to wear your AirPods in the elevator. If the CEO of the company walks in, this will be your one shot to say “hi” and introduce yourself … don't blow it by coming off as unfriendly.
3. When going out for dinner with the team, you can get a drink, but if you want to be respected by the more senior folk, do not be the one who gets too drunk. Save that for the bar when you are not with your MD or clients.
4. You are better off being a “loveable fool” than a “competent jerk.” What the heck does that mean? It means that even if you are brilliant, and the hardest worker, you still should be known as the person everyone wants to hang out with. If you don’t believe me, read this Harvard Business Review article. Essentially, just be humble and good things will follow.
This article was originally going to be a typical end-of-the-year essay, but I really hope that the lessons I tried to impart are more valuable than reading me ramble about my time as a student leader. I truly had an amazing time at Yeshiva University, and I hope that I can help many future students when it comes to networking and professional life. As always, feel free to reach out with any questions, comments, or concerns. I am by no means an expert, but I am always happy to give an opinion and do my best to help.
Wishing everyone good luck on finals, and enjoy the break!
President of Sy Syms School of Business Student Council
Photo Caption: “Student Council is about more than just helping students when they’re in school.”
Photo Credit: YU