As college students graduate and start their careers, financial responsibility should be a top priority. We list below, for both parents and graduates, 6 ways to take control of your financial future and avoid some of the classic pitfalls that can appear if you fail to plan!
New college graduates should be sure think through the following strategies when beginning to mind your money:
1. Create a budget!
Simply put, don’t spend more than you make. Calculate the amount of money you’re taking home after taxes, then figure out how much money you can afford to spend each month while contributing to your savings. Be sure to factor in recurring expenses such as student loans, monthly rent, utility bills, groceries, transportation expenses and car loans.
2. Set up an emergency fund.
Make it a priority to set aside the equivalent of 3 to 6 months’ worth of living expenses. Life can take unexpected turns and this is great way to ensure peace of mind should a job layoff or other unforeseen circumstances occur. Start putting some money away immediately, no matter how small the amount. There are multiple ways your financial institution can provide guidance on various savings tools and strategies. Bank of the James is always happy to have this conversation to get you started!
3. Pay your bills – and pay them on time!
Each time you miss a payment, your credit history can take a hit for up to 7 years and this could also affect your ability to get loans, the interest rates you pay on loans and your ability to get a job or rent an apartment. Consider setting up automatic payments for regular expenses like student loans, car payments and utility bills.
4. Don’t rack up debt.
Credit cards can be very tempting and offers are everywhere. Often, new promotions offer very attractive rates for an introductory period and then skyrocket. Understand the responsibilities and benefits of credit. Shop around for a card that best suits your needs and may have a solid rewards program. Spend only what you can afford to pay back. Credit is a great tool if used responsibly.
5. Think about the future!
It may seem odd since you’re just beginning your career but now is the right time to start planning for your retirement – never too early! Contribute to your employer’s 401(k) or similar account, especially if there is a company match. Invest enough to qualify for your company’s full match – it’s free money! View our Tip Sheet for Developing a Habit of Saving.
6. Take help offered by your bank.
Most banks offer online, mobile and text banking tools to manage your account night and day. Use these tools to check balances, pay bills, deposit checks, monitor transaction history, and track budgets.
Get your financial future off on the right foot – you will thank yourself later and be richly rewarded.
Come in and talk with your Bank of the James team about any of these topics – we’re glad to talk through any or all of the above strategies and help you get started preparing for the future today!
