Financial advice tailored for people getting started in the workforce.
Consider this stage in your life as paving the way for the rest of your financial future. The decisions you make in your 20’s and 30’s have a profound impact on the rest of your life. We have all the tools you need to help lay the foundation for success in the later stages of your life. Retirement may seem a long way down the road, but NOW is the time to begin saving for it. We have never encountered a customer who regretted saving too much for retirement. Now is the time to think and plan ahead, and we are excited to be able to offer tips and tools to help you along the way.
Make a basic budgeting plan that includes short, medium and long term goals.
The basic principle of living within your means is to total your monthly living expenses and subtract that total from your monthly income (excluding extras such as bonuses and overtime). This will give you a good idea of how much “extra” money you should have to budget for your goals. A short term goal might be something such as a wedding, honeymoon or first car. Medium term goals would include things such as the down payment for a home or paying off credit card debt. Long term goals would be financing your children’s college education and retirement.
To assist with your goals of budgeting, we recommend a checking account for deposit of your income. This will allow you to more easily track your funds. The following are checking account options for our customers who are over 18 and no longer students.
Build assets by saving a set percentage of your income.
There are many unique investing options in the world today. This is the perfect stage to begin your investment portfolio and determine a set portion of your monetary assets to set aside in an account or investing program that will compound interest. We are sure we have at least one option that will meet your needs:
- Certificates of Deposit
- Individual Retirement Plans
- Priority Money Market
- More complex options available through our financial professional
Generate an emergency fund.
A great base foundation for an emergency fund is to save three to six months’ worth of living expenses. This should be enough to cover food, fuel, rent, house or car payments and any other basic living expenses. This money should only be used in the event of unforeseen circumstances such as job loss or health issues resulting in time off work. The money for your emergency fund should go into a separate account and not be used for anything else. HHSB recommends the following option for creating an emergency fund:
Save time by using convenient paperless options.
We have our customers’ best interest in mind at HHSB. We offer options to allow you to avoid high interest credit cards and options for competitive interest rates on loans:
- Mortgage loans to purchase or refinance your home
- Home Equity Lines of Credit
- Consumer installment loans
- Credit Cards with a low interest rate
Understand your credit report and manage your credit score.
Your financial habits over the past 7 to 10 years, including the amount of credit you have, the length of time you have had it and whether your bills were paid on time is the information encompassed in your credit report. Equifax, TransUnion and Experian are the three credit reporting agencies that preserve these reports and sell them to lenders to assist them in making decisions about loan qualifications. The credit report that is purchased by the lender also includes your credit score that can range between 309 and 844, which helps the lender decide whether to extend credit to you and what interest rate to charge you. Typically, as your credit score increases, the rate you pay to borrow money decreases. All consumers are entitled to receive a free credit report from all three credit reporting agencies once every 12 months. The only agency endorsed by the Federal Trade Commission to provide the free reports is AnnualCreditReport.com.
Tips For Effective Financial Management:
- Diligently keep track of your funds. Keeping a balanced checkbook register may be one of the smartest financial decisions you will ever make. Even if you use exclusively paperless options such as debit cards and automatic funds transfers, you should always write down debits or credits to your account at the time they are made and not wait until they clear the account or show up online. This will allow you to know the exact amount you have in your account at any given time. It takes practice and determination to form this habit, but it is very important in developing good money managing skills.
- Pay off your credit card debt. There is no sense in paying 13% to 20% interest on credit card debt while the funds in your savings account are earning as little as a part of 1%.
- If you cannot pay off your credit card debt, pay more than the minimum payment per month to get it paid down. The minimum payment frequently only covers the accrued interest and does nothing to pay down the principal.
- Focus on credit card debt over student loan payments. Student loans normally have a much lower interest rate than credit card debt and making the minimum payment on student loans will allow additional funds to concentrate on paying the higher interest items off first.