Summer is upon us, which means many millennials have just completed their higher education. Whether their plan is to continue further in academia with higher-level studies or to get out on the job hunt, it is very important for recent college grads to gain financial knowledge and plan ahead. Through smart banking, budgeting and learning about financial literacy, college graduates can put their best foot forward and become fiscally responsible.
Deciding where to bank is an incredibly important point of consideration. Your bank is not only the place where your funds are secured and stored but also your access point when it comes to monitoring your finances. Given our smartphone-based lifestyle, it can be very convenient using a bank with excellent mobile banking capabilities. By having access to your account at your fingertips, you can monitor your spending habits, check on your account balances, and even make deposits.
It is also a good idea to determine fees and membership dues associated with banking institutions and credit unions. Many banks charge their members for opening accounts (both savings and checking), and have fees for overdrafts and excessive withdrawals and transfers between accounts. By doing research ahead of time and determining which banking institution best fits with one’s lifestyle and spending habits, recent graduates can put themselves ahead and have their financial security and history well within reach.
Budget, Budget, Budget
According to CNN Money, 54% of Americans aged 18-25 have no financial cushion, and are spending their entire paychecks to meet their expenses. This is certainly a scary statistic for millennials, but through smart budgeting, recent college grads can keep their head above water and save for the future. The best way to budget is by determining what your monthly income is (after taxes) and looking at it side by side with your monthly expenses. Consider your monthly expenditures on nonessentials — do you know what you’re buying? Gas, groceries, metro fare, and bills can add up, so be sure you’re covering your needs first and spending a smaller percentage on non-necessities.
Financial experts agree that 20% of paychecks should go towards savings. Whether or not this is realistic for young professionals and recent college grads is certainly dependent on many factors, including salary and monthly bill obligations, but attempting to save close to this percentage will pay off. By staying frugal, cutting out frivolous expenses and maintaining a nest egg of savings, recent college grads can grow their wealth and put it towards bigger life purchases down the road, such as a car or home.
Learn About Finance
A good sense of financial literacy is something eludes many millennials, which can cause fiscal instability in their lives. Broadly speaking, the term “financial literacy” refers to the economic knowledge possessed by an individual, allowing them to make informed decisions about their money and finances. While this is generally not taken as a class in high school, or in colleges for that matter, millennials can take it upon themselves to stay informed and become financially literate. There are many resources out there, but one must be proactive to become informed.
Hitting the books can be a great first step on the ladder to financial literacy. There are many excellent publications out there, so be sure to check the local bookstore or online retailer for one that most piques your interest. Checking in with news sources, such as Forbes, The Wall Street Journal and Financial Times can provide insights about global economics and the interconnectedness of the financial world. The Government even offers financial literacy initiatives, you can find more on the Treasury Department’s website. By remaining committed to financial literacy education, college graduates can further themselves financial and build their future.