Employment
Are you first in your family to get a career-track job? Here are some tips
November 17 , 2006
By Linda Stern
A lot of financial pressure comes with being the first person in your family to go to college or get a career-track job. Not all of it is good.
First-generation successes can be the target of family demands to help out parents, siblings, or other relatives. They can psych themselves out of succeeding by being too risk-averse, too afraid of being selfish, or too unschooled in finance to make wise investment decisions.
Many new immigrants find themselves in this position. They may be just getting by, but are considered rich by the standards of their families back home. Many African-Americans are in a similar spot: Their parents may have worked hard but never got the education or job that would put them ahead; now they're earning salaries that would shock Mom and Dad.
There's an apt metaphor for folks in this situation. It's like the airline passengers who are told to put on their own masks before assisting other family members with theirs. If you're the first one to get ahead, you've got to make sure you take care of yourself before you take care of anybody else. Here's how:
Get through college
Even if you have to borrow money. Student loans aren't cheap, but an education will pay off in a higher salary for the rest of your life. Don't limit your applications to local or state schools. Some of the best private colleges have the most money to hand out.
Have a rainy day fund
First-generation successes often need six to nine months' worth of income in a liquid account instead of the three to six months that is more typical, says Vicki Bracken, a MetLife adviser. There are a few reasons for that. Many of her clients don't have families who can rescue them if "everything blows up." They have a higher-than-usual fear of homelessness because they may be operating without that safety net. And, many have relatives who need some financial help. Keeping extra money tucked away safely in a money market mutual fund or bank money market account can help.
Invest in life insurance
Others depend on you, so consider them when figuring out how much insurance to get. Even if you don't earn a lot, your salary might be a more important component to your family's well-being than you think.
Use credit
If you come from a family or cultural background where everything is cash-based, and even loans are done informally, that can hurt you later on when you want to borrow money to buy a car or a house. Don't get into debt, but do use a credit card to build your credit score.
Save for retirement, education
Not everything about your situation is different. Retirement savings and educational savings are more tax-favored than other forms of savings and more necessary, too. If you can stash money into your own account, you'll know that you're not going to have to be asking your own kids to help you out.
Protect your name
Don't co-sign loans, warns Howard Dvorkin, of Consolidated Credit Counseling Services. A family member's loan default can destroy your credit scores or put you on the line for his loans.
Adopt a policy for helping others
This isn't easy, but if you have specific criteria for saying yes or no, that can be a big help. You might want to create a family emergency fund and make deposits into it. Stacy Francis, a Manhattan financial planner, tells clients they should use a third-party intermediary if they are lending money to a family member or friend. She recommends CircleLending, of Cambridge http://www.circlelending.com.
Study the stock market
Or mutual funds, or banking, or all of the above. Too many scam artists make their living selling unnecessary or overpriced financial products to the naive.
Feel really good about yourself
Some first-generation successes are saddled with guilt, as if they somehow are showing disrespect or disdain for their families by moving beyond them economically. That's understandable, but it's not fair or realistic. You can help everyone more by being a success. You'll be economically independent, and a role model.
