Financial Basics For Young Adults

Financial Basics For Young Adults

~Getting started on a lifetime of good financial management~

 Key Concepts of Personal Financial Management!

Being on your own can be exciting, but it comes with many responsibilities. Financial literacy will serve you very well as you launch your adult life. Here are some key financial concepts for this important stage in your life!

1. Budgeting:

It's the cornerstone of good financial management at any stage in life -- no matter how much, or how little money you have at the moment.  When you start supporting yourself, it's very important to have a plan. Write down all income, all required expenses, and your short- and long-term goals. Make a plan for saving and spending.  Keep an eye on day-to-day spending, which is an area where it's easy to blow the budget -- especially when parents are no longer contributing.  Good budgeting skills can make the transition to being on your own much smoother. 

2. Banking Skills:

As you know, credit unions have higher savings rates, lower loan rates and low or no fees.  Find out what services will benefit you: Get a low-interest-rate credit card if you qualify, opening a checking account and savings account, and ask for help in choosing the right additional services for your situation.  If you don't already know, learn how to balance a paper checkbook or to use personal financial management software.  Ask questions, read up on financial basics and visit your credit union for help if needed.

3. Expenses, Expenses:

Many new expenses will crop up as you start life on your own: rent, insurance, doctor and dentist visits, food, transportation costs, utilities and more.  It can seem overwhelming.  Get a firm handle on your expenses by using a budget. You'll know where the money is going, and, more important, you will have a much better chance of having enough money to cover all those additional expenses.

4. Credit & Debt:

Will all those new bills, it can be tempting to run up the credit card or take out another loan.  Be smart about credit.  Over-extending yourself and missing payments can lower your credit rating. Does that matter?  You bet it does! A low credit score can affect your ability to get a job, rent an apartment, obtain utilities, be approved for a car or school loan, and more.  Don't risk it.  Debt is a top financial problem for young adults, and it has long lasting consequences.  A credit card is great, when used properly.  Make payments on time and don't spend beyond your means.  If you do find yourself in over your head, don't just ignore the situation.  Act immediately: Contact creditors, find a competent credit counselor and come to the credit union to get help!

 5. Bailouts?

When times get tough,  you may be tempted to turn to the Bank of Mom & Dad for a bailout.  Many experts advise parents to resist the temptation to save young adults from their financial mistakes.  Whatever your decision, this is at best a temporary fix to a potentially serious problem.  Responsible financial management from the start is a better choice. 

6. Saving:

In the excitement of striking out on your own today, it may be difficult to focus on what's ahead in a few years.  But it's important to consider long-term goals now:  marriage, home ownership, children, etc.  An important financial lesson is to save a portion of everything you earn.  First, set aside some funds for a rainy day -- an unexpected car repair, health bill, etc.  Then consider even small, regular deposits to a savings account toward those long term goals. It's even not too early to start thinking of retirement -- you can open and start funding an IRA regularly, even if the contribution is small.  Try to at least contribute any amount that your employer will match. You'll be surprised at how fast regular savings amounts will add up.   

7. Your Future, Your Goals:

Effective financial management can mean the difference between a good life and a stressful life. Make the effort to follow through on these key concepts and you will get your adult life started out on the right foot.

8. We're here to help:

The credit union is a great resource.  As a member-owned, not for profit institution, the credit union's focus is on education and member-oriented financial services.  We'd be glad to help you set up accounts or answer questions. We are here to help you prepare for a lifetime of good financial management!

  

Any Questions??? Visit Us Online!!! www.svdcu.org

How to Save for Something Big

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help with your family finances.

Whether you want to save up for a cool video game or your college education, you're going to need a financial game plan. Check out some of these ideas that'll get you started!

Get a Savings Account
If you're serious about saving your cash, keeping it in a shoe box isn't going to cut it. It's time to start a savings account. This account should be separate from your checking or "spending money" account. Look for a credit union that offers a higher interest rate (that's the money the credit union pays you to keep your cash with them) and also make sure they don't charge you a lot of service fees. In fact, a lot of credit unions don't charge kids any service fees at all.

Start Saving Your Money Now
The next step is to start putting money in your account. Start with whatever you have, whether it's five bucks or a thousand, it all helps. The best thing to do is to make a saving plan. Decide how much you're willing to put aside every month and then do it. If you already have a checking account, most credit unions will be able to set up an automatic transfer every month - so the cash will come out of your checking account and go into your savings automatically. This is helpful because it's way easier to save money if you never have a chance to spend it in the first place.

Advanced Options: Investing Your Money
If you have a serious goal (paying for college, backpacking through Europe after graduation, etc.) the best idea is to start making your money work for you. The way to do this is to invest your money somewhere where it's going to make more interest than in your savings account.

Here are some options:

Bonds: When you buy a bond it means you are lending money to someone (for example, your government or a company). With a bond you get a higher rate of interest than with a savings account, but you have to wait longer to get your money back (sometimes 10-15 years).

Stocks: When you buy stocks you are actually buying a tiny piece of a big company (for example, you can buy stocks in Disney, McDonald's or Nike). You can often make a lot of interest in the stock market but you also run the risk of losing money too. If the stock goes down, the money you get back from your investment goes down too.

Mutual Funds: Mutual Funds are like investing on your own, but instead you pool your money with other people and invest in a bunch of things (stocks, bonds etc.) with the help of a financial manager. This is a good option because you have a professional doing all the hard work, and it is less risky since you don't have all your investments in one place.

Other Investment Options
There are tons of other investment options out there and a financial advisor, or a money-savvy parent might have some cool ideas for your specific situation. If you're trying to save up for school, you might find that your government offers some saving help. Some countries and states will chip in to your college fund, while others will give you (or your parents) tax breaks. Check out your government's web site or ask your school counselor.

From: http://www.kidzworld.com/article/3966-how-to-save-for-something-big