By Dale Vogl, Vice President, Star Bank Annandale
Graduation season is here and we are celebrating the academic achievements of our young people as they venture off into their next chapter of life. Congratulations, Class of 2023! We are proud of you and look forward to seeing what you accomplish next!
The paths that lie ahead for our 2023 graduates will vary – from attending a college, university, or tech school, to serving in the military, or jumping right into the workforce. While the future may look different for each graduate, it’s important for Graduates to understand the importance of financial independence. At Star Bank, we’re committed to financially empowering young people by being a trusted advisor. We enjoy providing resources and tools so our Graduates can make informed financial decisions about their future!
Below are my top 5 financial tips for Graduates who are embarking on their new chapter in life:
1. Create a budget: I challenge you to sit down this summer and review your financial habits. Outline your monthly income, spending, and goals. Get a good idea of what you’re spending (and where) so you can make sure you’re living within your means. For example, did you really need that Caribou Coffee every day this week? Budgeting can help you gain a clearer picture of what’s really going on, how to plan for the future and avoid unnecessary debt.
2. Build an emergency fund: If recent years have taught us anything, it’s to expect the unexpected. You never know what could happen and it’s good to have a cushion to fall back on. I recommend having at least three months of living expenses saved in an emergency fund.
3. Start saving for retirement: I know you just graduated high school, but retirement age will sneak up on you before you know it. The years go by very fast! Take advantage of retirement savings accounts such as a 401(k) or an IRA either through your employer or independently. The compounding interest on these types of accounts has the power to help you reach retirement and live out your “golden years” more comfortably.
4. Establish good credit habits: Pay bills on time, manage credit cards responsibly, avoid opening credit cards and then closing them right away, and keep your credit utilization low. Starting to build good credit early is important for future financial opportunities such as renting an apartment, applying for a job, and even car insurance rates – it all ties together.
5. Know what you're getting into: Before signing a loan or applying for a credit card, understand what you’re signing. This goes for anything from a retail store credit card to student loans to a car loan. Find out what the payments are, the interest rate, what happens if you miss a payment, and when the loan needs to be paid back. If you’re applying for a student loan, know what your options will be once you’re done with school, and how deferrals will impact repayment. Ask more questions!
Navigating financial responsibilities can be challenging when you are graduating from high school or college. It’s not uncommon to wonder how to build credit, how to avoid debt traps, and how to finance higher education. I am always happy to offer financial advice and help you find a sound financial footing. If you have questions about building credit, managing your money, or borrowing to pay for college, call me or your local Star Bank office today. And again, Congratulations to the Class of 2023!