Remember to save
"Remember to save" is hardly a stirring catchphrase for the college graduating class of 2011. But savings will pay off measured by the financial freedom to pursue your passions and it will also minimize the economic trauma from a layoff.
The good news is that this year is shaping up as the best job market for young college grads in years. The overall job market is picking up, too. Job creation in the three months ending in April averaging 233,000 a month and that compares to 78,000 a month last year.
Of course, it's really hard to save on a starting salary. So, start small and over time reach to save at least 6 months to a year in expenses.
Why set aside that much money? When you lose a job through a restructuring, a downsizing--whatever you want to call it--it usually takes time to find a new employer. And the older you get the bigger the odds that you'll often end up with lower pay. package.
That's one message I take from 2010 report from the John J. Heldrich Center for Workforce Development: Unemployed Workers and the Great Recession: Highlights from the Heldrich Center's Work Trends Reports, 2009-2010.
For example, of the people they surveyed who were newly reemployed as of November, 2010 nearly half took 7 or more months to find a new job.
Going through the report, it's striking to me that more than half the respondents to the survey said the job they have now lets them "get by" financially while they look for something better. (Let's hope that happens as the economy strengthens.) A majority were forced to take a big pay cut. For instance, of the unemployed, 61% said their family was worse of compared to two years ago. For the long-term unemployed the figure was 68% and 52% for the reemployed.
Yes, these results reflect the worst job market since the 1930s. Nevertheless, the trend had been in place long before the Great Recession.