Millennials have taken over the internet, the universities and soon the workforce. This generation is stepping off of college campuses across the United States and moving towards their first career out in the real world. Seven out of ten of these college students graduate with nearly $30,000 in student debt. Putnam Bank wants to help! Here are five money savvy lessons to help secure a financially protected future for those new, and returning, to financial planning.
- Spend like a student until you’re not paying like one. Some classmates get a lucky break, landing jobs with salaries that help them pay off their debt fast. Others hop into the workforce with a clean slate thanks to scholarships and grants that prevented debt. If you’re not in either camp, don’t spend like you are. When others are buying new cars or moving to expensive cities, continue spending as frugally as you did in college until you can afford differently.
- Harness the power of compounding. Start saving as soon as possible. Save for a car, house, or retirement, it’s never too early to start setting aside a portion of your income. Saving a small amount every month while paying off student debts can greatly impact your financial future, one step at a time.
- Take advantage of employer-sponsored programs. If your company offers a 401(k) or similar retirement plan, jump on it. Small, regular paycheck deductions create a consistent boost in your savings without the temptation of spending. Also, deductions reduce your taxable income, meaning less income tax is lifted from your paycheck.
- Cash isn’t always better than credit. Cash may help you limit your splurge purchases and stick to a budget but it can’t build your credit score. When it affects your ability to secure a loan, the interest rate you’ll pay on it, and at what credit limit, your score can’t be taken lightly. Over one third of your rating is simply based on making your payment on time. Making monthly purchases and grocery charges with your credit card helps you build credit when you pay off your balance in full each month.
- You can’t learn everything online. Yes, the internet gives access to tutorials, FAQs, and budgeting programs that can help you manage your financials; however, it can’t fully replace the expert opinion of a professional trained to diagnose and treat your unique financial status. A financial advisor is invaluable, walking with you through the peaks and valleys of your monetary journey, gently guiding you in the right direction.
If someone you know could benefit from Financial Literacy 101, get in touch with one of our advisors at Putnam Bank today!
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