MONEY Careers

Work for the Man? That’s So Over, New College Grads Say

With banks dissing them and peers largely underemployed, Millennials are finding an alternative financial future.

Big companies still have many high-paying positions, and with the job market perking up those opportunities will expand. But young adults are still having trouble establishing basic financial security—or landing a decently paying entry-level job. Instead, they are forging different paths to financial success.

This search for alternatives starts with checking and saving. Banks haven’t figured out how to serve this new generation. Millennials have big debts from college, and instead of a single, steady full-time job, a recent grad may have four or five paying gigs. Banks can’t fit them into an existing box. But this new generation still needs credit and banking services.

Faced with this inflexibility, one third of Millennials seek to cut ties with traditional banks and financial companies, according to market researchers. Half say they are counting on start-up firms to overhaul how banks work, and 75% say they would prefer financial services from the likes of Google, Amazon, and PayPal. They are also turning to alternative financial firms like Square, Betterment, Robinhood, and Wealthfront to manage their payments and manage their money.

In their search for financial options, young adults are also finding new ways to launch their careers. Millennials have seen under-saved Boomers delay retirement, while corporations have shed workers and their peers are settling for jobs below their ability. As a solution, more twentysomethings are turning to entrepreneurship. Six in 10 recent college graduates are interested in starting a company, according to a new survey by CT Corp., a small business services firm. Those results mirror similar findings by other polls.

Entrepreneurial pursuits offer the potential to put individuals squarely in charge of their future. This is the mindset that the Thiel Foundation capitalizes on with its 20-under-20 fellowship, which seeks to develop entrepreneurs right out of high school and convince them they don’t need college or the student debt that comes with it.

The problem is that while many recent college graduates say they want to be their own boss, a large portion doesn’t really understand what that entails. So while 61% say they’d like to start a company, only 45% believe it’s feasible, CT found. Meanwhile, 67% display a knowledge gap around practical aspects like incorporating, registering a business name, securing a domain, and marketing their products or services.

Still, the entrepreneurial spirit runs deep in this crowd. One in five recent grads started a business while in college, and even among those who don’t believe they’ll ever start a company a third dream about doing so. More than half believe that being their own boss offers greater rewards and more financial security over the long run. Let’s hope they are right because in the new normal this is the path often taken.

MONEY Odd Spending

What You Wish You Could Give Dad on Father’s Day — But Shouldn’t

Your dad might really be in need of a hearing aid, a fitness regimen, or some form of anti-snoring assistance. But Father's Day is probably not the day to tell him.

Father’s Day is an excellent opportunity to give your pops something he’ll really love. And, like all gift-giving holidays, it’s also a great chance to send him not-so-subtle messages about his lifestyle and habits via passive-aggressive presents.

This might sound like a funny prank, but be warned: While you may wish to give such gifts, it is not advisable to do so. Handing Dad a cheeky present is all fun and games until he turns the table on you. And make no mistake, he will.

When he does, you better brace yourself (especially millennials out there) because he has more ammo than you can possibly imagine. By the time Dad was your age, he’d already moved out of his parents’ home, got a first job (maybe even started a business), found a partner, and had a child or three. He’s the spitting image of the American dream—he’s bullet proof! You? Maybe not so much. Your latest brilliant idea involves buying your dad snarky presents on the day established in his honor. So if you go this route, don’t be surprised when your birthday present from dad is an all-expenses-paid trip to boot camp, a job search guide, or “How to Get Married Before It’s Too Late.” Remember: You started this.

So you probably shouldn’t go there. But if you were to do so, here are some ideas.

Protein Powder and Fitness Magazines

A huge tub of whey and a subscription to Muscle and Fitness might be a great gift for a dad who’s already extremely into working out, but could seem a little sarcastic if your father’s workout routine consist of one sit-up per day (when he gets out of bed). Another, more covert option? A Fitbit or other wearable fitness gadget. Everyone loves new toys, and dad will be forced to go outside for a while in order to play with this one.

Anti-Snoring Gift Box

If you really want to make your point about Dad’s power to wake the entire house with one deep unconscious inhale, be sure to give dad a real sampling of anti-snoring products. That means anti-snoring spray, anti-snoring nasal strips, an anti-snoring pillow, and my favorite: an anti-snoring jaw strap. Who cares that many snore stopping products might not actually work? As the Joker said, it’s about sending a message. Put them all in a pretty basket, with a bow on top. Dads always appreciate good presentation.

Soap

For whatever reason, giving nice soap (as opposed to other personal hygiene products like toothpaste or shaving cream) is actually pretty standard Father’s Day fare. This is good because you can achieve your objective—more, or at least better, bathing by the old man—without causing offense. Well, not too-too much offense. The standard route is an organic soap sampler, but if you’re interested in giving the clearest possible hint, it’s hard to beat a single bar of Dove in an otherwise empty box.

Cooking Lessons

The offensiveness of cooking lessons really depends on how hard everyone else in the family laughs during the reveal. If it’s more of an “ahhhhh” reaction with lots of head nodding (and maybe a few snickers), then you’re all clear. If everyone spits out their soup guffawing over dad making anything other than reheated Mac N’ Cheese, then your message will get through. But don’t expect any gifts from dad next Christmas. Or ever.

Hearing Aid

There’s no subtlety here. This is something many fathers need but do not actually want because it suggests they’re getting a littttttle over the hill. However, if you’d like to avoid yelling whenever pops is in the room, you might just have to force the issue. Before you do, though, consider this: Does your dad actually want to hear everyone’s dinner-table squabbling at family gatherings?

MONEY Kids and Money

Why Daughters Are Better Than Sons — At Least Financially

140612_FF_InvestinDaughters_1
Both cute, but the one on the right may cost you less later. Tripod—Getty Images

If you're raising a girl, congrats. A new survey finds that in adulthood, daughters are less likely to bleed parents dry—and more likely to provide free care.

Ever wonder when your kid will move out of the house for good and stop treating you like an ATM?

If that kid is a boy, you may have longer to wait than if you’d had a girl. After age 18, daughters are less likely than sons to move back home or need a financial hand from mom and dad, according to a new survey conducted by Harris Poll for Yodlee Interactive, a digital financial services technology company. And not only are those grown-up daughters more financially independent, they are also more likely to provide care for their aging parents down the road.

In the survey, 41% of adult men with living parents report getting funds from mom and dad to cover expenses. Only 31% of adult women with living parents say the same. Unsurprisingly, aid is more common among young adults: Of those 18 to 34, three-quarters of men and 59% of women say they receive financial aid from their parents.

But that help lingers for many. Of 34- to 45-year-old men, 35% still get parental help, while only 18% of their female peers do.

Perhaps women have been conditioned to getting less financial support. A study from the University of Michigan’s Institute for Social Research found that boys are 15% more likely to get paid for doing chores, and a new survey from Junior Achievement USA and the Allstate Foundation found that 70% of boys get an allowance, compared to only 60% of girls.

When do I get my guest room?

Parental help doesn’t end with handouts. Men are more likely to room with mom and dad, too: 32% of adult men do, vs. 25% of women, and that can be costly. A report in the Wall Street Journal found that hosting a child over 18 can run $8,000 to $18,000 a year.

A Pew Research analysis of 2012 U.S. Census Bureau data found that millennial males were more likely than their female counterparts to live with their parents. A full 40% of men ages 18 to 31 did, vs. 32% of women that age.

The Yodlee survey found that this trend extends to other generations. Among 35- to 44-year-olds, 32% of men are still spending nights in their childhood bedrooms, while only 9% of women are. Of those living at home, the most common reason cited by sons was un- or underemployment, while daughters listed taking care of their parents.

A sliver of good news for parents of sons: By age 45, these stark differences in financial independence fade, with males lagging only a few percentage points behind females in these two areas.

Traditional roles persist

Still, the advantage of having daughters persists in other ways: Daughters easily out-perform sons when it comes to supporting aging parents. Sons are almost twice as likely as daughters to say that they will not back up their parents emotionally by doing things like calling or visiting. Close to 60% of daughters provide that support, while just under half of sons do.

Sons’ redeeming quality? They are slightly more likely to help subsidize their parents’ living costs than daughters are, even as women are more likely to be the caregivers. This role is long-established. A study published in the Journal of Applied Gerontology last year found that women were more likely to care for parents, assist with their personal needs, and help with chores, errands, and transportation.

Finally, if you have a son, don’t expect your daughter-in-law to fill the gap. Yodlee’s survey found that you’re out of luck on all facets of support from in-laws, male or female.

Yodlee_Interactive_Fathers_Day_Infographic

 

MONEY

More Millennials Leave the Driving to a 100-Year-Old Bus Company

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A new Greyhound bus, which features leather seats, extra legroom, Wi-Fi, power outlets, three-point seat belts, on-board restroom and wheelchair lift. Greyhound Lines—AP Photo

The old dog, Greyhound, celebrates its 100th anniversary this year. It has been trying to learn some new tricks—namely, how to attract young travelers.

Ten years ago, Greyhound used the occasion of its 90th anniversary to launch a campaign to woo younger customers. A gimmicky “spokesdog” named Friendly was unleashed as a strategy to reach out to college-age riders to take a second look at Greyhound, known primarily among consumers for its “grimly spartan, ill-maintained terminal facilities, road worn vehicles and the general low-end milieu of bus-station culture, a 2004 AdAge story summed up, all of which had “endowed [Greyhound] with a less-than-cool reputation among the younger set.”

Friendly may not have made much impact on Greyhound ridership, but apparently a widespread shift to urban living, combined with decreased car ownership—especially among millennials—plus substantial changes over the years made by the company in terms of routes, passenger amenities, buses, and terminals seem to have put it on the right path.

About the time Friendly appeared in Greyhound ads, the company began restructuring its routes to better match up with the needs of the modern-day marketplace. Few travelers would even consider seriously long (coast-to-coast) bus rides, so instead of keeping the focus on being a national network, Greyhound put much more emphasis on better serving urban areas.

In particular, Greyhound positioned itself to be a convenient option for travelers heading in between two cities that are fairly close together—say, within 300 miles or so. At such a distance, one might also probably consider flying, renting a car, or hopping a train. Compared to these options, the trusty old bus has some appeal because it’s cheaper, quicker, more convenient, less of a hassle (no TSA checkpoints), or all of the above. It made much more sense for Greyhound to increase nonstop service from New York City to cities like Boston and Baltimore, and from Dallas to Austin and Houston, rather than keep offering abundant multi-stop (read: frustrating seemingly endless) cross-country trips.

“We took miles driven between New York and Los Angeles and put them into New York to Boston, which we do every 45 minutes,” David S. Leach, president and CEO of Dallas-based Greyhound, recently told the Dallas Morning News. “We continue to rationalize our miles, putting buses on routes that people want to ride.”

Greyhound is a privately held operation, and it wouldn’t give up all of its financials to the Morning News, but it did reveal one eye-opening stat: Its broadly expanded Express service, which tends to be used on nonstop city pairings like those mentioned above, produced $121 million in revenue in 2013, compared to just $2 million in 2011. Greyhound also said in light of shifting demographics and living preferences, its “potential prospects” as customers could triple in the near future.

As Fast Company reported, the motivation for many of Greyhound’s changes was the realization that more and more people—young people in particular—want to live in cities, and they like the idea of not owning cars. “Times change, [the] country changes. People are moving to big cities,” Leach explained to Fast Company.

When Greyhound asked people what they wanted out of a city-to-city bus company, unsurprisingly, many indicated that they of course demanded the basics—including clean, on-time service. But they also wanted tech amenities to make the trip go by quicker, and perhaps even be productive. This translated into outlets for charging devices on buses, as well as wi-fi, which are increasingly standard on Greyhound buses.

Bus fares are cheap too. This is undeniably a big part of the equation. Millennials need affordability at least as much as they need wi-fi. It’s not unusual for a rider who has booked in advance to pay under $15 for a one-way journey of a couple hundred miles. As gas prices have spiked and remain high today, even people who own cars are apt to consider hopping Greyhound—or Megabus or another bus competitor—for a ride of four hours or less.

While the fares are cheap, Greyhound has taken many steps so that the overall “Greyhound experience” doesn’t feel grungy and cheap. Beyond wi-fi and on-board outlets, Greyhound has refurbished three-quarters of its terminals over the past decade.

In some ways, Greyhound can thank the competition as the impetus for its transformation. Increased competition among bus companies has not only served customers well, with lower fares, better amenities, and more convenient routes, it’s arguable that the rise of Megabus and various “Chinatown shuttles” popular among younger travelers has helped reintroduce Greyhound to the college-aged set. Interestingly, a Cleveland Plain Dealer reporter recently took a side-by-side look at Megabus and Greyhound Express on back-to-back rides between Cleveland and Columbus to compare the operations. Among her observations:

Megabus offered a slightly better price and a younger clientele. Greyhound had better places to wait and more convenient travel times.

As for the rides themselves? They were mostly good:

Both rides were comfortable, relatively on time, seemed safe, and were mostly clean (except for the bathrooms – you’ll want to avoid these if at all possible).

Well, some things never change.

MONEY Savings

Millennials Are Saving, But Men Are Saving More. Here’s Why.

Among young adults, a savings gender gap is starting early. Are you ahead or behind?

You’ve probably heard that Millennials are doing better than previous generations in saving for retirement—those who landed jobs, anyway. But here’s something you may not have heard so much about: young men are saving significantly more than young women.

That’s the finding from a new Wells Fargo survey on Millennial savings habits, which found that overall 55% of young adults are saving for retirement. But that number disguises a wide gender gap. More than 60% of men are stashing money away, compared with just 50% of women.

“We were surprised to see the gap in this generation, when they have such similar profiles,” said Karen Wimbish, director of retail retirement at Wells Fargo. She points to the relatively few number of women in high-paying positions as a key reason for the disparity. For college-educated Millennial men, the median household income is $77,000, according to the survey; for women, it’s $63,000. (Those figures are similar to 2012 data from the Bureau of Labor Statistics, which found that women ages 20 to 24 earn just 89% the median earnings of their male counterparts.)

Given that difference in pay, it’s not that surprising that 26% of young men manage to save more than 10% of their incomes, compared with just 9% of women. The majority of women surveyed (53%) put away only 1% to 5% of their pay.

For both men and women, debt loads are making it more difficult to save. Some 40% of Millennials say they feel overwhelmed by debt. Nearly half say more than 50% of their pay is going toward debt repayment, and 56% “live from paycheck to paycheck,” the survey reported. The largest payments were owed to credit cards (16% of debt), followed by mortgages (15%), student loans (12%), auto loans (9%), and medical bills (5%).

Still, paying off debt, especially high-interest credit-card balances, can be a smart move, even if it delays saving, says Dan Weeks, a financial planner at Sound Stewardship in Overland Park, Kansas. But for many Millennials, those payments are likely to slow their ability to buy a house and start a family.

One bright spot: Millennials are becoming less risk averse—nearly one-third are invested in the stock market. Among college-educated young men, median financial assets, including stocks and bonds, were $58,500; for women, $31,400. And more than two-thirds of Millennial expect their life after retirement to be better than that of their parents. They could be right about that.

MONEY buying a home

Half of Millennials Will Ask Mom and Dad to Help Them Buy a Home

For millennials struggling to buy homes, it's mom and dad to the rescue, a new survey says.

When debt and lack of savings stand in the way of homeownership, what’s an eager millennial to do? Ask mom and dad to pitch in, according to a new Trulia survey.

Half of young adult homebuyers, unable to make the investment on their own, said they plan to ask family members for help with a down payment. Meanwhile, 65% said they would not give up their car in order to save to put money down — and 45% said they need their smartphone. For 15%, parting with their Netflix subscription was also not an option.

Almost half of respondents said they didn’t know how much money they’d need to put down in the first place. Of those who did know, nearly two in five said they would put down less than 10%. A 20% down payment is considered best, because it qualifies buyers for the best interest rates and generally eliminates the need for mortgage insurance.

The combination of asking family for money and putting so little down could be “a little bit of a recipe for disaster,” said Michael Corbett, Trulia’s real estate expert.

“I would rather someone not purchase a home, than purchase a home they can’t afford or have to stretch to afford,” he added. Because it creates a “nasty catch-22”: a smaller down payment means a larger mortgage, which means lenders will impose a higher income requirement.

Money 101: What Should I Do Before I Buy a Home?

They may be stretching to afford it, yet millennials comprised the largest group of recent buyers, 31% of purchases, according to the National Association of Realtors’ Generational Trends Study.

This was no surprise to NAR chief economist Lawrence Yun, who noted that younger buyers have the same “American dream” aspiration to own property as the older generation. Which poses a conflict: they “have the desire but not the capacity.”

Indeed, for many, existing debt doesn’t allow them to save enough for a down payment. Student debt delayed homeownership for 54% of first-time buyers, according to a NAR study. Of those facing difficulty, 56% of “Gen Y” attributed the delay to student loans.

The numbers show that young buyers need to wait until they’re ready, Yun and Corbett agreed. Given that homeownership is a major expenditure, buyers should have a good sense of whether they’ll need to relocate in the near future, and how secure their job is.

Money 101: Should I Rent or Buy a Home?

In the event of unemployment, Corbett said, a millennial buyer is unlikely to have enough saved up.

“You don’t want to be strapped,” he added. “When the music stops, you don’t want to be caught.”

MONEY Autos

If You Hate Haggling, This Is the Week to Buy a Car

Auto Dealerships Fate In Question As Bailout Fails In Senate Vote
American flags are seen on cars for sale at Santa Rosa Chevrolet December 12, 2008 in Santa Rosa, California. Justin Sullivan—Getty Images

Edmunds.com is sponsoring the first-ever Car Week from June 9 to 15, promising buyers upfront, no-haggle, no-hassle pricing at dozens of car dealerships.

Most consumers hate haggling over car purchases. Millennials, raised in an era of heightened transparency and speedy, easy one-click online purchasing, hate the stressful time suck that is haggling more than most. In a recent survey conducted for Edmunds.com, 91% of millennials said they’d prefer to avoid haggling during the car-buying process, compared to 78% of Baby Boomers and 83% of consumers overall.

Seeking to explore the exact extent of haggle hate in the marketplace, pollsters also inquired as to how many respondents would give up sex for a month, have no use of their smartphone for a weekend, or voluntarily be shut out of Facebook (for a month) in exchange for the right to skip the usual negotiations at the car dealership. Plenty of people said yes, absolutely, sign me up—21%, 29%, and 44%, respectively. To spell that out, 1 in 5 buyers would give up sex for a month if it meant they didn’t have to haggle for a few minutes (OK, maybe a few hours) to get a fair price from a car salesperson.

Edmunds didn’t asked these questions simply out of curiosity, but to pump up the utility of the haggle-elimination service it introduced last summer called Price Promise, and to set the stage for the first-ever Car Week, which takes place June 9 to June 15.

Car Week is modeled on the concept of Restaurant Week. Only instead of the enticement of cheaper prix fixe meal pricing at a fancy restaurant, consumers are being wooed by the promise of (hopefully cheaper) pre-negotiated pricing at car dealerships. “The goal is to make car shopping as easy as it can be,” Michelle Denogean, chief marketing officer at Edmunds.com, said over the phone. “Consumers think that car buying today is still too hard. It’s still too stressful.”

(Side note: Many restaurants hate Restaurant Week for a variety of reasons, and it wouldn’t be surprising if many auto dealerships aren’t fans of Car Week either. We’ll have to see how this one plays out.)

The Price Promise tool—which allows shoppers to get guaranteed no-haggle prices from dealerships instantly via Edmunds.com—and the advent of Car Week are being presented as solutions to the problems. For this year at least, only consumers in the New York and Los Angeles metropolitan areas can take advantage of Car Week. Hundreds of dealerships featuring virtually every auto brand in these cities are participating. “They’re all offering up-front pricing, no haggling required,” said Denogean. “Buyers will save thousands off the sticker price. They’ll save time too.”

At participating dealers, every new car this week will have a special tag showing on a no-haggle price on par with what you’d find via the Edmunds.com Price Promise tool online. Edmunds sent us some sample pricing. For example, at one Los Angeles dealership, a 2014 Audi A8 Sedan with a manufacturer’s suggested retail price of $96,050 will show a no-haggle price of $86,064 this week, or nearly $10,000 off the sticker price. Another L.A. dealership will be selling a 2014 Chevrolet Silverado 1500 Crew Cab with a MSRP of $49,045 for a final price of $45,813, or $3,232 off. In New York, the no-haggle offers include a 2014 Acura TL Sedan for $36,478, a $4,177 savings off the sticker price of $40,655.

While these prices are guaranteed, there’s no guarantee they’re the lowest prices possible. “We’re not saying that this is the absolute rock-bottom price,” Denogean explained of Car Week pricing. “There’s a small subset of shoppers who want to grind and grind to get the lowest price. They’ll go to multiple dealers, they’ll wait for the end of the month,” when dealers are eager to meet sales quotas and sales staffers are more likely to cut car prices in negotiations.

The point of Car Week, though, is to eliminate the need for negotiations, while promising buyers they’ll get a decent—but not necessarily bargain-basement—price. If nothing else, before pulling the trigger buyers should at least see how the upfront prices during Car Week compare to the average transaction price for the same car. Sites such as TrueCar, Kelley Blue Book, and of course Edmunds readily provide such information. Yes, the need for such as step represents a bit of hassle. But hey, this is car buying we’re talking about. God forbid it would be completely hassle-free, even during Car Week.

For that matter, consumers should also be ready to deal with the usual dealership hassles and upsells that usually come toward the end of buying process, when you’re worn down and antsy to escape, including the value of your trade-in, as well as extended warranties, service plans, rust proofing, fabric protection, and whatnot. “Those are areas we’re looking at for the future,” said Denogean of Edmunds.com, which would love to make these parts of the equation easier and less stressful for buyers as well. “For now, we’re focused on price, which is by far the biggest stress point.”

TIME Food

Millennials Spend More Time Planning Brunch Than They Do Looking for a Date

Young people are poring over menus and restaurant apps preparing for their next meal

It’s Wednesday afternoon, but my mind is already on Sunday brunch.

“Where should we go this weekend?” reads a text from my friend. Saturday’s mimosas haven’t even left my system yet, but I’m already planning my next outing.

Minutes later, links to menus are flying back and forth between my G-chat windows.

“This place has apple wood smoked bacon and cheddar scones.”

“Peanut butter French toast? Yes, please.”

“We must try those apple cider donuts.”

My friends and I will spend the next few days casually talking about where we want to go, and what we want to eat. Ultimately, we’ll probably spend more time talking about the food than we will eating it.

And it’s not just brunch. Whether my book club is meeting at a cute French café or coworkers want to grab a bite after a long day, menus are being passed around and obsessed over.

The extensive menu planning doesn’t just happen in New York. Friends from San Francisco to Pittsburgh, Washington D.C. and Denver have admitted to thinking about their meals way in advance. Blessed with fast metabolisms and loose incomes, it’s something we can enjoy now before settling down to strollers and delivered groceries.

Much like modern dating, eating out has become staggering array of choice. Smartphone apps like Ness or Localeur make finding a restaurant easier than a date. My friends and I pore over images of ramen and cupcakes the same way we’d look at a dating profile. It’s like Tinder for food. But unlike the solitary swiping of a hookup app, this activity can be more social – and easier. Not only can we see photos of the menu choices, but also it’s simple to reserve a table or deliver dishes with the tap of a finger.

One reason companies are eager to roll out dining apps is because millennials are spending more when eating out. A recent study found that teenagers now devote more money on food and events than clothing. They want to make sure they are paying for the most delicious, Instagrammable meal. Flashy handbags or cars are being traded in for brag-worthy experiences at funky diners or the newest sushi joint.

But sometimes the food planning hits a speed bump when old school eateries don’t have a website or aren’t listed on the apps.

“I can’t go to a restaurant without looking at the menu first,” my best friend once admitted to me.

It makes sense: for a generation that operates on instant information, there’s a slight anxiety of going to a restaurant that doesn’t list its options.

But in those cases, we can turn to Yelp. The reviewing website, which mainly serves the 18 to 35-year-old crowd, allows people to post pictures of menus and see which meal is most popular. It’s brunch intel overload.

Not to say that this trend of researching a meal is bad. It broadens the conversation about food and helps you connect to your friends. Plus it helps us spend our money a little more wisely. With so much personal financial investment going into a meal, why wouldn’t millennials want to plan the experience?

MONEY 401(k)s

The Three 401(k) Moves Millennials Should Make Now

Millenials sitting on the floor discussing 401k investing
Roberto Westbrook—Getty Images/Image Source

A few smart—and easy—choices in your 401(k) can go a long way toward getting off to a good start.

For the so-called Millennial generation, born after 1981 (yes, that includes you, 30-year-olds!), retirement might seem far off.

But if you’re lucky enough to have a job with an employer-sponsored 401(k), you ought to take advantage right now. Assuming you—like many of your peers—feel too perplexed by your options (or too busy multi-tasking) to put in much effort, here are the best bare-minimum moves:

1. Contribute even if you don’t get a match. Although the vast majority of large employers offer some matching 401(k) contributions, smaller companies don’t always do the same. But your account is still worthwhile. A 401(k) lets you set aside a chunk of your paycheck before it gets taxed and shields that cash from Uncle Sam as it grows. Yes, you’ll pay income tax on the money you take out when you retire. But because you got to stash more to begin with—and that money will have had many years to build—you’ll do better than you would have in a taxable (e.g., savings or brokerage) account.

For example, imagine you put away $4,000 annually starting at age 25. Here’s how much more you’d have saved by 65 if you kept that money in a 401(k) instead of an unsheltered account:

401k mill
NOTES: Assumes 6% investment returns and a 25% tax bracket. SOURCE: Paul Herman, CPA

In addition to being hit with income taxes, money in a non-retirement account is subject to taxes on earnings—whether from dividends, capital gains, or just simple interest. Not so with a 401(k). And therein lies another big advantage. “The less money coming out because of taxes, the more available for compounding, which is the real wind at your back,” says Brooks Herman, head of data and research at BrightScope, which rates 401(k) plans.

If you’re fortunate enough to get a match, maximize it. Say your employer matches up to 6% of contributions (the most common match), but you save only 3% of your salary each year? You’re leaving free money on the table.

2. Take the cheap and lazy option. If you feel clueless about the funds offered in your 401(k) plan, you’re not alone: A TIAA-CREF survey recently found that more than 40% of millennials who participate in retirement plans are not familiar with their investment options.

Assuming you’d like to do as little work as possible, go with a target-date fund. These funds—which automatically adjust your relative holdings in bonds and stocks (your “asset allocation”) to be less risky as you get older—are particularly attractive if they charge less than 0.5% in annual fees, or $5 for every $1,000 invested.

3. Don’t touch that money, unless you need it for a medical emergency. Millennials have it tough, financially, with higher debt and unemployment (and lower income) than Gen Xers and Boomers had when they were young, according to a recent Pew study. So it might be tempting to view your retirement account as a good rainy-day fund. But money in a 401(k) is meant for retirement, and if you try to pull it out early (before you are 59 ½) you will have to pay an extra 10% tax on top of standard income tax. That penalty could wipe out all the benefits of the account, and then some. The only real exception to the penalty is if you are using the money because you’ve been disabled, or for certain qualified medical expenses. Likewise, borrowing against your 401(k) should be only a last resort.

If there’s a serious chance you’ll need to use your savings for future educational expenses or for buying your first home, an individual retirement account (IRA) not sponsored by your employer might be a better vehicle for your cash, because those come with slightly more flexible rules for early withdrawals. But in general, retirement accounts—whether 401(k)s or IRAs—should be left untouched until you actually retire.

MONEY Careers

New Degree, No Job? 4 Steps Grads Should Take to Jumpstart the Search

Now that commencement's over and real life is about to begin, career coach and former HR exec Caroline Ceniza-Levine offers strategies to get your career in gear, stat.

As a former recruiter, I have hired thousands of new graduates into their first full-time jobs, so I’ve seen the hiring process up close, inside and out.

Some industries—like management consulting and investment banking—do the bulk of their hiring well before graduation. If you have classmates entering these fields, you might be anxious if you don’t have your own first career step confirmed. (This goes for parents, too!)

Temper your anxieties by keeping in mind that the vast majority of companies only hire as needs arrive. Some of those companies are looking to fill entry-level slots right now, just a few heartbeats after commencement. So it may not be long before you (or your child) is launched—assuming you’re strategic. Take these four steps to take now to get the search in gear:

Figure out the finances first

You need to have time for your search. Even in the best-case scenario, it may take a month or two for you to go through the interview and vetting processes and land your first gig. In that time, you need to have a stable living environment where your basic needs are met so that you can be confident and relaxed as you meet with employers.

That requires answering this question first: How are you going to cover your expenses as you look?

Talk to your family about how long you are welcome to stay. If you have student loan payments that had a grace period while you were in school, find out when the first payment is starting and how much it is. Sketch out the rest of your budget, so you know what you’ll need to cover yourself.

Pick the low-hanging fruit

If money is tight, you’ll need to land something quickly and start earning. But even if you have the finances to support a longer search, you’ll want to avoid a long gap on your resume.

People who already know, like and trust you will more readily hire you or refer you for positions. So start your search by reaching out to family, friends, former employers from past internships or side jobs, even professors. Let them know you’re available.

Employers get inundated with resumes, but if someone the hiring manager knows personally refers you as a candidate, there’s a better chance your resume will get noticed.

Don’t discount “stopgap” jobs

First jobs do not have to be exactly in your area of interest to be valuable.

One of my coaching clients worked a retail job after she graduated, while searching for something in her target area (media). That job not only gave her the means to support herself, but also introduced her to other recent graduates working the store; and as her fellow store clerks got hired into their corporate jobs, she got introductions to those companies.

One new graduate I hired had been referred to me by a senior executive—she had babysat for his kids, and he was impressed by her work ethic.

In other words, these so-called stopgap jobs can set the stage for bigger career moves.

Keep going after your ideal job

Block out specific days and times for the search for your ideal job, even if you take that retail job or freelance project in the meantime.

Identify the companies you’d want to work for, check their websites regularly and follow them on social media to hear about openings. Also, use LinkedIn to find people in your network who work there and can introduce you or at least give you more information about the company to make you a more informed (read: more competitive) candidate.

Additionally, join a professional association in your target industry or a broader networking group like your university alumni club. The member events allow you to get comfortable in professional settings and meet new people, some of whom might work for your ideal companies. You never know who might help get you your first job—or your next one.

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Caroline Ceniza-Levine is co-founder of SixFigureStart® career coaching. She has worked with professionals from American Express, Condé Nast, Gilt, Goldman Sachs, Google, McKinsey, and other leading firms. She’s also a stand-up comic. This column will appear weekly.

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