When the graduation ceremonies come to an end, your focus is likely on your future. Are you starting your first full-time job? Going to college and juggling a part-time job? As a responsible young adult, now is the time to get your finances in order by setting up and organizing your bank accounts. Handling money wisely at this stage of your life will make you successful for years to come, whether you’re taking a vacation, getting a car loan, or even looking to buy a home.
We contacted Siobhan Bales-Heisterkamp of Elevations Credit Union, Senior Digital Solutions Guide, and Andrew Goudy, Contact Center Specialist and .a Certified Credit Union National Association Financial Counselor for insider tips on what accounts young adults right out of high school benefit or college.
Account type # 1: checking account
It’s not uncommon for young adults to already have a checking account set up by a parent or guardian. Excellent! If so, check the account’s terms of service and then decide if it’s time to make a change. Whether you’re reviewing your current account or new to reviewing, here are some features to look out for:
- No monthly fees
- No minimum balance required
- Solo account (no parents as co-signers)
- How are overdrafts (more money spent than there is in the account) handled? Are there any fees for this?
Familiarize yourself with the features and fees of your checking account so you can get the most out of your hard-earned cash. And check your balance regularly to make sure you have enough balance to cover your purchases.
Account type # 2: savings account
If you’re just getting into the workforce, saving money can seem daunting. But it is wise to make an effort even if you are only saving a few dollars a week.
“It’s always a good idea to have a savings account. There are no monthly fees with Elevations, and while it is rare, some banks add fees to their savings accounts. So be sure to check before opening an account. It’s a good idea to set aside a certain amount of money from each paycheck, even if it’s only a few dollars, “commented Bales-Heisterkamp. Those dollars add up over time!
A savings account of as little as $ 5 to $ 10 a month can be just the cushion a young person needs when an emergency car repair or medical bill shows up. Goudy recommends aiming for $ 1,000 savings to start with, and eventually increasing the savings budget to three to six months of the cost of living, including rent, transportation, food, and student, car, or personal loans. This emergency fund will serve as a useful safety net should the unexpected happen.
When purchasing a savings account from a financial institution, ask about fees and limits on the account. Is there a credit limit?
Account type # 3: Retirement account
You might laugh as you plan when to quit early in your career, but it’s a smart move! Your employer may offer a 401 (k) plan. If not, most financial institutions (including Elevations) offer individual retirement accounts (IRAs) that you can contribute to long-term savings to fund your retirement years.
If your employer is offering a 401 (k) and making up the contributions, consider paying in at least the equivalent amount from your employer as this is free money for your retirement. And who doesn’t like free money?
Account type 4: certificate accounts and money market accounts
For the young adult focused on future planning, certificate accounts and money market accounts are essentially enhanced savings tools that can generate more money in the long run than a savings account.
“Certificates are a great way to earn some extra dividends and make sure you’re not spending any money you want to save. Money markets are great when you want more dividends but you want the funds to be liquid, ”said Bales-Heisterkamp. And, as always, ask if there are any fees involved in managing these accounts.
Certificates and money markets are great tools to start building your savings – with Elevations Credit Union, funds are insured up to $ 250,000 by the National Credit Union Administration (NCUA). It can be a good idea to work with a financial advisor to see your investment opportunities.
While you’re looking for the best accounts yourself, Goudy adds one final tip: “I strongly recommend everyone check out the features the financial institution offers on its website and mobile app. See how to deposit checks, make payments, and contact support. ”Choose an option that suits your lifestyle and needs!
A friendly finance team is at your disposal at Elevations. Contact us at one of our local branches, call our contact center in Colorado, bank with online banking or our mobile app, or use 30,000 ATMs nationwide. Have any questions? Call us at (800) 429-7626, use our online chat or drop by a local Elevations branch. We look forward to seeing you at Elevations.