College, Students

College Major … Choose Wisely

Making College Pay

I often hear people say, “You go to college to get an education.”  I’d say a more accurate statement is, “You go to college to prepare you to get a (good) job!”  Too many parents and students miss the subtle yet profound difference in these two statements.  Let’s think about this for a moment.  Does it really make sense to spend four to five years and tens of thousands of dollars attending and graduating from college only to find out there are no jobs (or very low paying jobs) in the course of study you’ve chosen?  However, it is my experience that many students give very little consideration to the long-term impact of choosing a particular major (I was one of those students!).  Parents are often just as guilty in that they provide very little guidance.

Kiplinger Magazine published an article that focused on the ten best and worst majors and the results are worth noting. 

Ten best college majors

Computer science; information management systems; software engineer; economics; finance; physics; statistics; civil engineering; actuarial mathematics and nursing.  For the most part, the common theme here is math, science and computers.  This group experienced many more job opportunities with starting wages in the $50,000 to $60,000 range.

Ten worst college majors

Culinary arts; music; child & family studies; animal science; media (radio, TV newspaper); interior design; drama; art; education; and graphic design.  A strong theme here is creative arts.  This group will often struggle to find jobs and starting pay will be nearly half that of those who graduate within a top ten major.

Why this matters

A few years ago, I was a trainer at a financial seminar and a sixty-something attendee came up to me after a session and said, “All this talk about money!  Money is not that important!”  My response was, “You’re broke, right?”  After a moment of stunned silence, he said, “Well yes, but…” 

Ok, I get that money is not the most important thing in the world and there are lots of things that are more important, but having enough money to pay your bills and save for retirement is immensely important.  I’ve watched way too many families struggle their entire adult lives because they didn’t earn enough money.  Understand that students entering college don’t have the perspective of not earning enough money because, in many cases, their parents have provided for most, if not all, of their needs.  Many see college as a fun adventure and give little thought as to ‘what happens next’ after they graduate.  They choose a major because it sounds fun.  The result is often the frightening realization that there are no jobs for which their major has prepared them and they are forced to accept a low paying job and, too often, return home to live! 

Here’s the takeaway

If you’re a student, before you choose your major, research what the job prospects are as well as the long range opportunities for advancement.  If you’re a parent, do your best to steer your children during their primary education and early secondary education towards academic areas where they’ll have the best opportunity to succeed financially.  I remember counselling a college student who had majored in accounting (a very good choice) but who was burned out had decided to take a management training job rather than continuing for one more year and getting his masters in accounting.  My partner, Greg Weyandt, CPA, and I convinced him his future was ever so much brighter if he gutted it out another year.  He did and he easily got a great job and has become a rising star in his field.  My associate, Beth Moody, CFP, points out that there are many incredibly rewarding careers with only modest income prospects.  If you choose this path, do so knowingly and prepare yourself to become a master of managing your money.  The bottom line is that your choices make a big difference in the trajectory of your life so be thoughtful and deliberate.

One final point.  My partner, Michael Wagner, CPA, pointed out that another major goal (opportunity) in attending college is to significantly expand your personal relationships.  Understand that financial success is always built around other people so the more people you have great relationships with, the more likely you are to succeed.  Use college as an opportunity to connect with lots of people through active participation in several campus organizations.  Not doing so is probably my greatest college regret.

Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the co-author of J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning (John Wiley & Sons, Inc.) and THINK Like a Self-Made Millionaire. Visit his Web Site  Consult your financial advisor before acting on comments in this article.

Smart Moves for College Grads

Smart Moves for College Graduates

Smart Moves for College Graduates

As I reflect back on my college years I mainly remember how much fun it was and then once I entered the ‘real world’ feeling a bit shocked at the reality of it all.  There is definitely a feeling of leaving one world and entering another completely different one.  I also remember receiving very little coaching about how the new world game was played.  That led to a lot of mistakes…or what I now call “learning opportunities”.  In this two-part series, I’ll share with you twelve of the lessons I wish someone had shared with me back then.

  1. Be flexible in finding a job.  I recently read an article attributed to the White House stating that real unemployment is zero percent.  Don’t you believe it!  The job market, particularly for college graduates, is particularly tight.  In this market, you may find that you have to ‘settle’ for a less than ideal job.  Your goal is to build work experience as you continue to pursue your dream job.  Whatever the job is, treat it as if it’s the best job in the world and your goal should be to master the position.  Learn the habit of always giving your very best.  People (employers) will notice. 
  2. Get more education.  The alternative to getting a job now in a challenging job market is to get more education.  When I graduated from college I was very ready to be finished with school but in today’s environment an MBA or other advanced degree can be very valuable and buy you some additional time for the job market to continue to improve.
  3. Begin saving from your very first paycheck.  This habit, more than anything else, will make you wealthy over time.  It is the single most important key for most people who become financially independent.  Start with a minimum of 20% of your paycheck…more if you can swing it.  Ten percent will be for long-term investing and, in a separate account, the other ten percent will be for future ‘big ticket’ items such as down payment on a home.  Set this up so that the money is either automatically taken from your paycheck or transferred from your bank account to an investment account.  Don’t ponder this one…just do it!
  4. Learn about personal finance and investing.  If you were to commit fifteen minutes per day to studying personal finance and investing, you’d be a ‘genius’ in a year!  Seriously, this stuff turns out to not be that difficult to master.  Mostly, it’s simply paying attention to your money and investing on a consistent basis.
  5. Buy a home.  Since the housing bust in 2008, home prices have rebounded but it’s still a great time to buy a home and home ownership is a great way to build wealth over time.  More good news is that interest rates on mortgages are still very attractive but realize that rates are likely to rise over the next few years so your best move is to buy as soon as you can.
  6. Avoid ‘bad’ debt.  If you could learn this lesson now, it will save you much misery in the future.  The definition of bad debt is any debt that is used for purchasing something that is declining in value.  For example if you use a retail store credit card to buy a closet full of clothes and then face months’ worth of payments…that’s bad debt.  Using a credit card to finance a big night on the town when you know you can’t pay the credit card bill in full when it rolls around…that’s bad debt.  Buying furniture and appliances on credit is bad debt.
  7. Avoid bad debt around owning a car.  I once had someone tell me, “I thought you always had a car payment!”  He was dead serious and he was also broke!  A car, by definition, is a depreciating asset.  In fact, when you drive a new car off the lot it depreciates in value about 10% that very day!  Most people arrive at the dealership, find their dream car and ask the salesperson, “How much are my payments?”  You’re asking the wrong question of the wrong person!  Dealers have been asked this question so many times that they figured out the perfect system to sell more cars and more expensive cars.  To get payments as low as possible, they’ll now finance a vehicle over as long as eighty-four months!  This is a terrible financial strategy for you.  Here’s a better approach:  If you don’t have cash to pay for a car, decide on how much car you can afford based on payments over twenty-four months.  In all likelihood, this will be a used car.  Once you pay your car off, continue to make ‘payments’ but now do it in an investment account dedicated as a new car fund.  Continue to drive your existing car and fund your ‘next car account’ until you can pay cash for your next car and then keep this cycle going forever.  That way you have your money working for you rather than for someone else.
  8. Embrace the concept of ‘Good Debt’.  Good debt is the use of financing to buy things that you expect to appreciate in value.  The best example is buying a home. Other examples include borrowing for investing such as buying rental properties or to start a business.  Even borrowing to advance your education can be a good use of debt.
  9. Protect yourself from adversity.  Great health may be your greatest asset.  There’s an ancient proverb that goes something like this, “A man with good health is a man of a thousand dreams.  A man with poor health is a man but with one dream.”  Like consistent investing produces wealth, a consistent program of exercise and good nutrition yields good health.  This should be one of your top priorities.  Believe me; it’s easy to allow other things to seem more important.  In addition, build cash reserves in a money market account equal to at least three to six months of your paycheck as a buffer against the unexpected expenses.  Also, make sure that you cover the insurance basics including owning disability income insurance, health insurance, auto insurance and life insurance if you have family dependents.
  10. Prepare every day for retirement. Ninety-seven percent of Americans arrive at retirement pretty close to dead broke.  The reason?  They felt they could worry about that ‘next year’…only next year never came.  Most companies offer some type of retirement plan that you can participate in and some also offer matching contributions.  But whether your company does or doesn’t have a plan you should set one up.  Your best first choice may be a Roth IRA.  To learn more, visit and type ‘Roth IRA’ into their search engine. 
  11. Cut the parental cord.  I just read an article that stated that 30% of millennials live with their parents! Reflecting on my thirty-plus years as a financial advisor, I’ve noticed that the most successful children have been those who had to ‘make it on their own’.  More so than at any other time, I see so many ‘helicopter’ parents who insist on helping run their children’s lives well into young adulthood.  Yes, it’s time to leave the safety of the nest, spread your wings and fly!  You can do this and you’ll be proud of yourself when you succeed.  So will your parents!
  12. Always be learning. Just when you thought you were finished with education, I’m telling you that you are just getting started.  There is no greater investment you can make than in yourself.  A primary life goal should be to be an insatiable learner.  Identify successful people in your chosen field and model what they do.  In fact see if they will act as a mentor to you.  If you ask, you’ll find most successful people are very willing to offer periodic guidance. 

Realize this…as a college graduate, the only limitations you have are the ones that you place on yourself.  Create a vision of what you would like to accomplish; develop a written plan; be prepared to ‘correct and continue’ along the way; and focus on continuous improvement.  There is nothing you cannot achieve!

Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the co-author of J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning (John Wiley & Sons, Inc.) and THINK Like a Self-Made Millionaire. Visit his Web Site  Consult your financial advisor before acting on comments in this article.


Habits of Superstar Employees

Six Habits of Superstar Employees”

In last week’s column, I discussed seven tips for having a winning job interview.  Once you’ve got that new job, here are the six habits for becoming a super star employee:

  1. “Lights on…lights off”.  Before I started my first job, my father gave me this advice, “How you conduct yourself in the first six months of work will set the tone for how your employer sees you forever.  Make an effort to be the first one at the office and the last one to leave.  Your employer will notice and in his or her mind, will see you as a hard worker.”  I took that advice and found that what started out as a 6-month goal became a habit that helped me start my own business.  One side benefit is that more time on the job equated to more job experience and a shortening of the learning curve.  I also found that folks were more willing to mentor the ‘new kid with hustle’.  So start your new job with a secret weapon, “lights on…lights off!”
  2. Adopt a ‘Whatever it takes’ attitude.  Don’t be a ‘That’s not my job!’ type of employee.  Most businesses in America are small businesses and everyone needs to be prepared to help where needed.  In fact, ideally you want to become the ‘go-to’ person when a special project comes up.  When we hire someone at our two firms, our job description is: ‘Whatever it takes’…then we proceed to outline what we call ‘Primary Areas of Responsibility’.   
  3. Be a team player.  Americans are innately competitive by nature, but in business, the greatest success comes from cohesive teams.  You know you have a good team when members are willing to help each other without concern for personal recognition.
  4. Do the unexpected.  What can you do outside your normal job responsibilities to help or add value to the company?  Roxie, my personal assistant, takes it upon herself to take lunch orders every day, sort through everyone paying their share and pick up the food.  This has been instrumental in building inner-office relationships since on most days we eat together.  Ramona is part of our administrative group.  She attends the Brock Business School’s monthly networking breakfast and uses it as an opportunity to promote our company.  Jeff, our systems administrator, often works on our systems at night or weekends.  I have similar stories for virtually every associate.  No one has asked them to take on these extra efforts but management certainly notices and appreciates them for doing so.  What can you do to help your company that would be unexpected?
  5. Think like an owner.  Too often there’s a sense of ‘us versus them’ between employees and management.  Think of how you’d act and what decisions you’d make if you owned the company and let that help guide your activities and office-related conversations.  If you have a suggestion for improving the company, let management know.  Conversely, if you have a problem that needs management’s attention, be sure to have at least one possible solution to that problem.  Understand that owners will notice when you are thinking like an owner.
  6. Embrace the concept of ‘continuous improvement’.  Every day think of what you can do to improve your skills at least a little bit.  In particular, look at where you are and where you want to go within your company then ask yourself, “What do I need to do to prepare me to move to the next level?”  It may be more education or experience in another area.  Once you decide, lay out a plan of action and either implement it on your own or with the assistance from your company.  In our companies, we require all advisors to have advanced education such as the Certified Financial Planner™ designation and we have a program that financially supports that goal.

In the end, you are in charge of your own destiny.  By proactively taking these six steps, you’ll become a superstar employee and be on your way to maximizing your career potential.

One final thought: If you are not a new employee but rather a seasoned pro, how many of the six habits would your coworkers attribute to you?

Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the co-author of J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning (John Wiley & Sons, Inc.) and THINK Like a Self-Made Millionaire. Visit his Web Site  Consult your financial advisor before acting on comments in this article.

Financial Insights by Stewart Welch

Financial Insights

Financial Insights


Shopping CD Rates can mean BIG Bucks

Shopping CD Rates Can Mean BIG Bucks

Question: According to information on, investors can earn higher interest rates on their savings and money markets by banking on-line than they can earn at local banks. For example, Synchrony Bank pays 1.25% on a one-year CD. Is there any risk in doing this? G.H.
Answer: No, just be certain your bank is a member of the FDIC and that your account does not exceed the FDIC insurance limits, currently $250,000. If you have more than $250,000, there are still ways to get full insurance coverage by splitting the funds into accounts with different titling. For example, you could have one account titled in your name, one in your husband’s name and one titled jointly under both of your names…allowing you to up to $1,000,000 fully insured in a single bank. How much difference can ‘shopping rates’ make? A $100,000 one-year CD at your Internet bank would pay $1,250 in interest while a large Birmingham, Alabama bank would pay only $100!

IRA Gains & Losses

Question: If stock is sold in an IRA and there is a loss, why can’t that loss be taken off your taxes just like you have to report a gain doing the same thing? C.J.
Answer: Federal laws for the Traditional IRA do not allow losses to be taken from your income taxes. Think of a Traditional IRA as a contract that has a beginning, a middle, and an end. In the beginning, when you contribute to your IRA, you receive an income tax deduction. At the end, when you withdraw money from your IRA, those withdrawals are taxable as ordinary income. In the middle, if you sell a security for a loss, there is no tax deduction. Likewise, if you sell a security for a gain, that gain is not taxable.

janeb13 / Pixabay

Avoiding the Obamacare Penalty

Question: I work part time and have no health insurance. In 2014 I made under the threshold for paying the penalty. For 2015 I made more ($12,560.) which is over the threshold ($11,880). My question is can I open a regular IRA now and put in $1000 to get me under the penalty limit? I already have a Roth IRA. I am 55 years old. J.W.
Answer: “The Obamacare penalty is specific to size of family and is based on Modified Adjusted Gross Income. There are also several potential exemptions that you may qualify for that would allow you to avoid the penalty. Your best bet is to complete your tax return for 2015 to determine your actual MAGI, then you can determine how much to invest in a Traditional (deductible) IRA in order to avoid the penalty”, says Kimberly Reynolds, CFP, a partner at The Welch Group. As a reminder, you have until April 18th, 2016 to make your IRA contribution for calendar year 2015.

Gift Tax Limits for 2016

Question: Regarding the statement: “In any calendar year, you are allowed to give away up to $14,000 per person to as many people as you desire without triggering any gift taxes.” Does this mean you can give 10 people $14,000 each or that you can only give a total of $14,000 divided among the 10 people? S.T.
Answer: For 2016, you can give as many people as you wish $14,000 each. If you are married, you can join in the gifts and together give up to $28,000 to as many people as you choose.