Before we start giving you our advice, congratulations! Whether you’re graduating high school, college or from a tech school, graduating is a huge life accomplishment! You’re entering the next stage of your life. And those of you graduating high school may be heading off to college before making the jump to the real world, but for many, the real world is the next step. And that can be an overwhelming feeling. There is a lot to learn and a lot to take in. That is why it is important to make good decisions today and in the future you will be forever grateful. You can trust me on that one.
As a bank, we’ll do our best to make sure you make good financial decisions today. Here is our advice to you, the recent graduate, as you prepare to enter the ‘real world.’
Create a Budget
Recent graduate or not, you should create a budget. Creating a budget has many benefits that help you out in so many ways. You can track spending habits, learn where you can cut back on spending and calculate how much you can save. Creating a budget can be as easy as tracking your spending on a spreadsheet, or using an app to track your debits and credits as they come in. This can be time consuming and some apps are expensive, which defeats the purpose of using the app. Lucky for you, we have a budgeting tool that can help you with monitoring your spending habits. And it’s free to use through your CNB Online and Mobile Banking! MoneyCentral allows you to monitor all your accounts in one place, even if they’re at another financial institution. Log into your online banking and check it out today!
Remember what I said about your future self thanking you for making good decisions that will help you in the future? Here’s a prime example. Whether you have a goal in mind like saving for a car, a home, or perhaps even an engagement ring (I’m sure a certain someone reminds you about this often enough, I promise not to mention it again), there are many different reasons to be saving and the good news is that you can start now. If you have any student debt, this may be difficult at first, but I promise it’s worth it.
Another reason to save is to build a cushion. You never know when your beloved dog will become sick after eating a couch cushion, or another emergency will arise leaving you searching for additional money. If you already have money saved up, it can alleviate stress and prevent you from taking out a loan just to make ends meet.
Don’t Rely on a Credit Card
We just mentioned having a cushion to fall back on, so this transitions well to the usage of a credit card. Thinking you won’t need a cushion because of your card and/or credit limit is a bold move. While building your credit is important, and we would highly recommend working on building your credit if you haven’t started already, it is just as important to be responsible your use of credit. A wise man once told me, ‘your credit limit isn’t a challenge, it’s a LIMIT.’ Keeping your credit limit as close to 30% or lower is what is recommended, but sometimes, that just isn’t possible. And when the balance does start getting up there, being aware and making an effort to pay it down sooner rather than later will be a decision you won’t regret.
Start Paying Off Debt
Speaking of paying things off sooner rather than later, this is how all debt should be treated. If you’re just graduating high school, you probably don’t have much debt. So this piece of advice may be targeted more at the college graduates. And college graduates may have a large amount of student debt. Luckily, you normally get a 6 month grace period before you have to start repaying loans. While paying extra toward the highest interest rate is tempting, researchers at the Harvard Business Review found that paying the smallest debt first and ‘snowballing’ to the largest is the most effective strategy.
Start saving for retirement
I know, I know. You’re young, fearless and ready to take on the world, but there will be a day where you’re no longer any of these adjectives. And when that day comes, you’ll be ready to sit on the porch and watch the sun set every night. Before you can kick your feet up and enjoy retirement, you first have to save for it. The earlier you start, the more you can save. The more you save, the earlier you can retire. I don’t think I need to go into much more detail as to why you’ll want to start saving now.
Time for a sales pitch!
We’ve got advice, but we’ve also got the tools! Central National Bank has a variety of products and services that can help guide you through the next stage of your life. Visit our website www.centralnational.com or visit with someone at your local branch today to see how we can help your transition into adulthood as seamless as possible!