Let’s face it: schools don’t do a great job preparing us for managing our finances.So when you’re out of college and start real life, it can be a little overwhelming. You may have student loan debt, new bills, and benefit options to navigate.
Here’s your crash course on what you should do to set yourself up for financial wellness:
Utilize Online Banking Apps
Chances are your financial institution has an online banking app, and you need to download it ASAP. Chances are it will allow you to monitor your balance and transactions, transfer money, pay bills, and deposit checks. If you’re going to get a handle on your finances, you need to be proactive, and this is an easy first step to take.
Scrutinize Your Current Account
Are you paying fees? If so, for what? Monthly maintenance and minimum balance fees should not be on your statement. Free checking accounts, even a free rewards checking accounts, are available, so don’t settle for something else.
Build Your Credit
At this point, you may only have a student loan on your credit report, and maybe a credit card. Time to start building on that. Ask your credit union about a Credit Builder Loan or a FlexLine of Credit. And if you already have some accounts open, make sure you’re making payments on time every month. You’ll need that credit history when you go to buy a car, rent an apartment, or get a mortgage.
You should also manage your checking account so you don’t overdraw your account. This can put you behind in fees and reflect poorly on your financial record.
Repay Debt Strategically
Speaking of credit, a lot of young adults have credit cards with high interest rates (a rate you probably were given because of your shallow credit history). Focus on paying off those debts first! If possible, transfer balances to a lower-rate card. It’s much easier to pay down debt when more is going toward the balance.
Build an Emergency Fund
Life happens. You may get in a car accident, have medical expenses, lose your job, or any number of unplanned/unfair/unfortunate events. That’s why an emergency fund is important. Set up an automatic savings plan where you pay yourself first. Deposit a small amount of your paycheck into a separate savings account, that way you aren’t tempted to spend it.
Create a Long-Term Savings Plan
Thinking short-term, like with an emergency fund, is helpful, but you also want to think big picture. Does your employer offer 401(k) matching? If so, get on that boat! It’s essentially free money, and it’s an investment for your future.
You can also set other savings goals, like having X amount saved in a year.
Older Adults: Any Tips?
“I wish I knew then what I know now!” Share your knowledge!