4 Crucial Money Tips for Your First Job

Recently graduated college? Before you come face to face with the real world and your first job, be sure you review the following important money tips.

1. Keep your debt limited.

When you’re starting out in your first job, you will quickly find yourself probably making about five times what you were making from your part-time college gig. That account balance can look quite enticing. Try your best to not let debt grow. Tackling debt can take years, and you don’t want to add to it.

2. Start a savings account/emergency fund.

When you’re young, you tend to push things off because you think you’ll have plenty of time. When it comes to saving, the earlier you begin, the more you’ll appreciate it later. If you save $100 a month, during the first 5 years after college, you will have created a $6,000 fund that could come in handy when you need to make lemonade out of the lemons that life will inevitably throw at you from time to time.

3. Stick to a budget.

This may be one of the harder tips to stick with, especially when you have more money than you’ve ever had in your life. Buying every meal from your favorite restaurants is tempting, and the sooner you curb that habit the better. By budgeting, you can see how you’re really spending your money. Try not to look at it as restricting your spending, but rather a guide to help you spend confidently.

4. Don’t forget about retirement.

Retirement seems like it’s 40 years away (and maybe it is), but it’ll sneak up on you. Putting your money in an IRA early is one of the best decisions you can make. There’s a little thing called compound interest that wants to be your best friend. Read about it and you’ll be happier than a kid in a candy store.

Article Source: John Pettit for CUInsight.com

How to Survive Real World Budgeting for the First Time

One of the most exciting times in life is entering the real word as a young adult. Finishing school, getting that first full-time job, and venturing out on your own is always an important milestone. However for many, the excitement wears off pretty quickly and you then get hit with one of the harshest realities of being an adult: managing your own finances.

Why is it so hard? Budgeting and learning how to spend your money wisely for the first time is a challenge for everyone. And you’re bound to make mistakes. To make your transition easier, here are four tips to help you survive budgeting in the real world for the first time:

1. Know Your Take Home Income

When you get your first job, you will get a salary offer. Let’s say you’ll be making $20 an hour or roughly $40,000 annually. Does that mean you’ll be taking home a little over $3,300 a month?

Wrong! When you get your first pay stub, you’ll see that many expenses are deducted from your paycheck, such as state and federal taxes, social security income, and health insurance (just to name a few). This can take up a very large percentage of your gross pay, on average 25%. It’s important to know what your true net or take home income will be so that you can properly budget.

2. Understand All Your Expenses

Living away from your parents for the first time can be a real eye opener. You start realizing how many things you actually need to pay for that you didn’t necessarily think about before. Make sure you really understand what all your expenses will be – from the big items like rent, all the way to the little things like paper towels. If you’re trying to figure out how much to spend on rent, a good rule of thumb is no more than 30% of your gross income.

Also think about your food costs, which will probably be your second biggest expense. If you’ve never had to do grocery shopping before, a good first step is to just hit the grocery store with a list of necessary items you need to buy weekly. Get a gage of how much everything costs so that you can better budget for this in the future. Remember, all the little things add up – so make your budget as detailed as possible.

3. Be Organized, Track Everything

One of the most important things about managing your finances successfully is organization. Once you have that down, you’ll have an accurate snapshot of how you’re spending and what you should cut back on. Many people forget the little things, like a daily cup of coffee, but even a small expense like that can actually add up in the long run.

Make sure you’re keeping track of everything. The easiest way to do so is by starting a spreadsheet where you input your expenses. Tools such as Mint.com are also great to use, because you can integrate it with your bank and credit card accounts to help you track your purchases.

4. Save, Save, Save

Being on your own for the first time is exciting, and you’ll want to do everything and spend on everything. But remember that it’s important to live within your means, because not doing so will get you in financial trouble down the road. Start good financial spending habits now. Have a small budget for discretionary spending, but for the most part: save, save, save.

Start an emergency fund as soon as possible—because you truly never know what can happen in life. It’s also never too early to start thinking about retirement. With the power of compound interest, the earlier you start saving for retirement, that more you’ll see later on when you need it.

Article Source: Connie Mei for Moneyning.com 

Congrats Graduate! 4 Things to Do with Your Gift Money

Cash tops the list of popular graduation gifts year in and year out. If it’s your turn to don a cap and gown this year, congratulations – you probably pocketed a significant amount of change along with your achievement. So, what are you going to do with it?

Since we tend to view graduation gifts as a form of “extra” money (a psychological money trap known as mental accounting), it can be tempting to quickly reach for that wish list. Before you do though, consider these four ways you can use it to both celebrate your achievement and give yourself a better financial foundation for the future.

1. Celebrate the present.

You’ve achieved something important, so go ahead — spend some of that money on yourself, any way you’d like. Instead of blowing the whole sum, financial advisors recommend setting aside about 10% for yourself. If your cash gifts totaled the $1000, that still gives you $100 to spend on clothes, electronics, entertainment – whatever.

2. Invest in your future.

With the other 90%, one good choice is to invest in tools that will help you succeed in your next life steps. If you are jumping into a high tech job, maybe you’d like a new laptop or specialized software you could use to make work life more efficient.

There are also other practical needs like expensive furniture and household goods if you are moving out. Although the return can be harder to quantify, putting some of your graduation gift money toward these expenses is an investment in yourself.

3. Save for the future.

Graduation cash doesn’t have to burn a hole in your pocket – it’s okay if you don’t have a plan for it right away. In fact, saving it is a very good plan. If you’re already on a budget or would like to start, treat your graduation money like income and apply the 50/20/30 rule. Savings is the 20%, so calculate this much and set it aside.

Although you can certainly save for the future in terms of life after high school or college, you may need to first focus on shorter-term needs like living expenses. One of the best places to save your cash is in a separate savings account (or an account you won’t be using for daily purchases). Since you won’t see or use this money all the time, you’ll feel less tempted to spend the funds on impulse purchases.

4. Invest for your future.

Investing in your future is important, but so is investing for your future. For young investors, many financial advisors recommend mutual funds with low-cost index funds. The key is to choose an option that doesn’t require extensive management, knowledge, or risk, especially when you’re just getting started.

The amount you invest isn’t so important; after all, your money and your salary will grow for decades to come. They key is to start learning the ins and outs of investing. Not only will this give you another, potentially more profitable savings channel, you’ll learn solid investment management skills that will set you up for the future when you need to properly allocate the wealth you will accumulate for the rest of your life.

Questions about investments? To set up a complimentary consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings goals, contact us at 732.312.1500 or stop in to see us!*

Regardless of how little or much your graduation cash amounts to, determine to enjoy a little, save a little, invest in yourself, and plan for the future. The way you choose to use this money can set a trend of how you’ll manage your money for years to come, so let it be a good one!

*Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

Article Source: Jessica Sommerfield for moneyning.com

 

How to Get Your Child Financially Prepared for College

college-students-awesomeAfter high school graduation, your teen will probably be spending the summer gathering dorm necessities, picking classes and hunting for the cheapest textbooks.

One major point of focus should also be signing up for the right student financial accounts, specifically checking accounts and credit cards. With so many choices, it can be confusing for parents and students, but there are simple approaches to getting college-bound kids financially prepared.

Pick the Right Checking Account

When looking for a checking account, parents may be quick to sign their children up to their own banks or to a major bank close to home. However, that approach may not be the best for the college student.

Since college students may need cash for spontaneous occasions, it is important to have an in-network ATM at or near the college campus. Constant cash withdrawals at out-of-network ATMs can amount to plenty of fees. At the 10 largest U.S. banks, the average out-of-network ATM fee is $2.45. Furthermore, the operator of the out-of-network ATM has the right to impose a surcharge, which typically ranges from $2 to $3.

Besides location convenience, parents also have to consider their ability to fund their kid’s accounts. Parents and students should research which financial institutions are around campus and near home to find the one with a student checking account that would allow them to stay financially connected. Parents, you should also make sure that the financial institution you choose has instant transfers during the times you have to transfer money into your child’s account electronically – you don’t want a 1-2 day delay period.

First Financial’s has a great Student Checking Account available for 14 to 23 year old students!*

Sign Up for the Right Credit Card

Credit cards are less attainable by college students since the Credit Card Act of 2009 took effect, requiring anyone under age 21 to provide proof of reliable income to qualify for a card. If a student can qualify for a credit card on his or her own, it is crucial to evaluate spending and repayment habits to maximize any rewards and minimize interest paid.

For instance, a student who will be driving around campus may prefer to get a credit card that offers rewards on gas purchases. Or if a student doesn’t expect to be able to pay off their balances every month, he or she may opt for a card that doesn’t have rewards but carries a lower interest rate.

The more likely situation would involve parents adding their children as authorized users on an existing credit card account. Parents can limit how much their children can spend on their authorized cards, and when the occasion calls for it, they can raise or reduce the limits accordingly. As authorized card users, students can also start building their credit profiles, which can increase their chances of qualifying for credit cards and loans in the future.

Keep an Open Line of Communication

Do your children know what to do in the case of a financial emergency? College students may encounter dilemmas that cannot be solved with the financial means available to them.

Parents should keep an open line of communication that would allow their children to contact them in the event of financial distress, regardless of how bad the situation may be. It’s important for parents to continue providing financial and emotional support, so their kids can focus on the most important aspect of college: their education.

Click here to view the article source courtesy of Simon Zhen of US News.

*A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details. Accounts for children age 13 and under are excluded from this program.