The good news is that about 70% of Millennials are optimistic about their financial future and believe they will be wealthier than their parents. The bad news is that Millennial young adults show signs of not always taking the right steps for effective financial planning. For example, about 56% of millennials currently live paycheck-to-paycheck and 60% feel like they aren’t making effective plans for saving for the future. Here are a few banking tips for any Millennials worried about managing money and advice on how to make the most of your banking services.
Use Budget Apps
There are apps such as Mint or Spending Tracker that let you record various aspects of income and expenditures. Taking advantage of these apps to track how much you spend each week or month is important for getting a bird’s eye view on just where your money is going. It’s easy to inadvertently spend more than you realize especially if you find that you are purchasing a lot of small things over an extended period. Budget apps help you get a total view and see how everything adds up.
Automatically Build Savings
It is possible to set up automatic transfers from your checking account to a savings account, and you should arrange for this to happen on a weekly basis. The exact amount will depend on your current situation, but somewhere between $25.00 and $75.00 is a good starting point and you can increase the amount until you find one that works. Setting up an automatic transfer has two main benefits: first, you are building a savings fund that can be drawn on for unexpectedly large expenses (car repairs, medical bills, etc.). Second, you can get used to working with a smaller pool of available income and work on spending “below your means” since the transferred money is effectively unavailable for day-to-day purposes.
Stick to Debit
Using a debit card forces you to work with the money you have. While credit cards have their uses, you should avoid employing them until you have developed better financial planning and money management techniques. Sticking to debit helps you stay aware of your available funds and encourages sustainable financial habits.
Spending large chunks of money—such as when paying rent—can sometimes result in your being hit with an overdraft fee from spending more than the account’s balance. Stay on top of your current balances and always check ahead of time before writing a large check. This is especially true if your bank has a small delay between when you deposit your pay and when the money actually becomes available.
Use Credit Cards Wisely
Credit cards can help build credit and show you as able to handle debt responsibly when it comes time to apply for a loan. To help with this, avoid cards that charge annual fees and take steps to ensure that you can always make your minimum payments on time, but ideally repay more if possible. Interest rates on credit cards tend to start at around 19%, so paying the debt off quickly can save you quite an impressive chunk of cash. If an unusual expense has made it difficult to meet minimum payments, call your credit card company or bank (ideally with documentation) and explain your situation. If you are polite and have a good history, they may be able to help you out.
Prioritize Debt before Discretion
Even if you have the money necessary to engage in discretionary spending, you should prioritize paying off your debts first and foremost. Always remember that what you are able to “afford” is based on more than the amount of money you have on hand in a bank account.
Look for Free Checking & Savings Accounts
Shop around for a banking option that lets you have ready access to your money and doesn’t charge you for doing so. Many banks advertise free checking accounts, but there are often certain conditions under which fees will be called for. Make sure you understand the terms and conditions of an account before signing up.
Look to LUSO Federal Credit Union for Financial Planning and Effective Banking Services
LUSO Federal Credit Union is a not-for-profit, member-owned financial cooperative dedicated to providing members with quality financial services and products. We at LUSO pride ourselves on serving the financial needs of our members and helping them develop effective money management techniques for the future. Our services are available in Ludlow, Springfield, Chicopee, Westfield, and Hampden County, Massachusetts.
Feel free to contact our Ludlow branch toll free at 1-844-LUSO-FCU or our Wilbraham branch at 1-800-808-5876.