Financial Tips Our Team Wishes They Learned in School
When you think back to a younger version of yourself, don’t you wish someone had sat you down and given you an all-you-need-to-know exclusive on personal finance?
We asked our team members what financial tips they wish they learned in school. Here are some of the responses we received, and some personal finance lessons our team members learned later in life.
Start an emergency fund.
”I wish I had learned more about budgeting, saving, and investing. For those who are looking to purchase a home, don’t just look for a home you can purchase and make payments without it being a task. Also, make sure you have a savings account to maintain your home (emergencies, repairs, improvements, etc.).”
While storing money away in case of an emergency might seem like an afterthought, you never know what tomorrow will bring. By preparing your finances for unexpected events, you can best determine how much you should be saving for a crisis.
Set a budget for yourself.
“For years, I just spent whatever I had to spend and then wondered why I was never getting ahead. I finally learned that if I did not keep track of where my money was going, I would never make it financially. Knowing where your money is going is key to financial freedom.”
- Bobi Jo
Setting a budget for yourself is a great way to keep track of your spending. You might eve have room to save a little extra each month. Using Online and Mobile Banking is a great way to track your spending while you’re on the go.
Have a separate savings account.
“Start/open a savings account that you pay into every month as if you were paying a bill. Set up an allotment from your paycheck to go directly into that account. Do not get a debit card for the account so that you are not tempted to make a withdrawal or purchase. As time goes by, increase the amount for the allotment. Before you know it, you will have saved more than you thought you could.”
Setting up an account specifically designated for saving will help you keep the money you’re saving separate from your Checking account. We also offer a 12 Month Add-on Certificate that you can open with just $100. Unlike a traditional share certificate, our 12 Month Add-On Certificate allows you to deposit any amount, at any time, to your account. Plus, this account earns a higher dividend rate* compared to our Savings account, helping your savings grow.
Invest in your retirement.
“My advice to young people when they get a job is to start saving for retirement. The sooner you start, the better. And make it a habit before you start having other bills and obligations like a car payment or rent or mortgage payments. It doesn’t have to be a lot; any amount is better than no savings. (And, if your employer offers a 401(k) with matching funds, do it – that’s free money.) I wish somebody had told me that.”
Even though it may seem like retirement is far into the distant future when you’re young, saving for retirement early can jumpstart your investments. Compounding interest will work in your favor the earlier you start putting away money. Compounding interest is interest you earn on top of interest. For example, if you deposit $1,000 into an account that pays 1% interest, you’d get $10 in interest after a year. The next year you would earn the 1% interest on the $1,010. One of the easiest ways is to earn compound interest is to have funds sent to a savings account or IRA with direct deposit.
Identify your long-term vs. short-term goals.
“I’m a millennial and started my career in the middle of the recession. My first paychecks didn’t go far, so budgeting was key. I started saving in a 401(k) account as soon as I started working because I knew every little bit I could save would add up. But there also has to be a balance when it comes to saving for long-term vs. short-term. I would save up for trips and other things too, so there would be a more immediate reward – still do this today because I love to travel. The biggest thing is to know what’s important to you and then tailor your budget from there. Because I wanted to go on trips, I would cut in other areas, not going out as much, keeping the car my parents gave me as long as it would run, and not going out and buying a new one – decisions like these add up.”
While managing your finances, it’s a good idea to establish your long-term vs. short-term goals. This will allow you to get a good idea of what you can spend and what you need to save for the future. Even though you may really want something today, it may benefit you the most to save that money for tomorrow.
Understand how credit works.
“I was taught the importance of saving when I was younger, but no one ever took the time to explain how credit works. It wasn’t until I had my first job with a bank that I started to learn more about the importance of reviewing my credit report on a regular basis and that credit cards and loans can actually be helpful at establishing and maintaining credit if used the right way. Because I had very little credit when I was ready to purchase my first home, I applied for a share secured loan so that I could establish my credit. It took me a couple of years to establish my credit, but that also gave me extra time to save for a down payment on my first home. Today, I check my credit report at least once per year, and I have a couple of credit cards I use on a regular basis to earn rewards points.”
Building and maintaining good credit is essential to your financial wellbeing. One of our blogs, Understanding Your Credit Report, provides some helpful information about your credit report and how to review it. If you need to establish or rebuild credit, a secured loan or secured credit card might be a good option. These types of loans use your own money as collateral for the loan, and the credit limit is usually the same amount as the funds used as collateral.
While it's never too late to learn something new about managing your finances, this blog post is also great to share with young people just starting out on their financial wellness journey. For many of us, planning for the future can seem stressful; however, there are little things you can do now that can save you from financial stress later in life.
*For Certificates with maturities equal to or greater than nine (9) months, dividends will be compounded quarterly and credited quarterly. Certificates are subject to penalty for early withdrawal. Fees and withdrawals may reduce earnings on the account. $100 minimum balance to open.