As graduation parties wind down, you’re likely focused on your future. Are you embarking on your first full-time job? Are you heading 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. Savvy money management at this stage in life poises you for success in the years ahead, whether you want to take a vacation, secure a car loan or even buy a home.
We reached out to Elevations Credit Union’s Siobhan Bales-Heisterkamp, Senior Digital Solutions Guide, and Andrew Goudy, Contact Center Specialist and .a Certified Credit Union National Association Financial Counselor, for insider tips on which accounts benefit young adults fresh out of high school or college.
Account Type #1: Checking Account
It’s not uncommon for young adults to already have a checking account that was established by a parent or guardian. Excellent! If that’s the case, review the account’s terms and conditions, then decide if it’s time to make a change. Whether you’re reviewing your current account or you’re new to checking, look for these features:
- No monthly fees
- No minimum balance required
- Solo account (no parents as co-signers)
- How are overdrafts (spending more money than what is in the account) handled? Are there fees for this?
Make sure you understand the features and fees of your checking account so you can make the most of your hard-earned money. And, check your balance regularly to ensure you have enough funds to cover your purchases.
Account Type #2: Savings Account
When you’re just getting started in the world of work, it can seem daunting to save any money. But making an effort is smart, even if you only save a few bucks a week.
“It’s always a good idea to have a savings account. There are no monthly fees at Elevations and, while rare, some banks do have fees on their savings accounts, so be sure to check before opening an account. It’s a good idea to try to put away some amount of money, even if it is just a few dollars, from each paycheck,” Bales-Heisterkamp commented. Those dollars add up over time!
Setting aside as little as $5 to $10 per month in a savings account can be just the cushion a young person needs when an emergency car repair or medical bill pops up. Goudy recommends aiming for a savings balance of $1,000 when first starting out, and eventually increasing the savings budget to equal three to six months of living expenses 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 shopping for a savings account at a financial institution, ask about fees and limits on the account. Is there a cap on balances?
Account Type #3: Retirement Account
You might laugh at the thought of planning for when you’ll stop working at the start of your career, but it’s a smart move! Your employer might offer a 401(k) plan. If not, most financial institutions (including Elevations) offer Individual Retirement Accounts (IRAs) that you can start contributing to for long-term savings aimed at funding your retirement years.
If your employer offers a 401(k) and matches contributions, consider contributing at least the match amount from your employer, as that’s free money for your retirement. And who doesn’t like free money?
Account Type #4: Certificates Accounts and Money Market Accounts
For the young adult who is focused on planning for the future, Certificate accounts and Money Market accounts are essentially enhanced savings tools that can generate more money than a savings account in the long run.
“Certificates are a good way to earn a few extra dividends and ensure that you do not spend money you want to save. Money Markets are great if you want to earn more dividends, but want the funds to be liquid,” Bales-Heisterkamp explained. And as always, ask if there are fees associated with the management of these accounts.
Certificates and Money Markets are great tools to start building your savings — at Elevations Credit Union, funds are insured up to $250,000 by the National Credit Union Administration (NCUA). It may be a good idea to work with a financial advisor to see your options for investing.
As you shop for the best accounts for yourself, Goudy adds one last tip, “I highly encourage everyone to check out the features that the financial institution offers on their website and mobile app. Look for how you can deposit checks, make payments, and contact support.” Choose an option that fits your lifestyle and needs!
At Elevations, you have a friendly financial team at your fingertips. Connect with us at one of our local branches, call our Colorado-based contact center, bank with online banking or our mobile app, or use 30,000 ATMs nationwide. Have questions? Give us a call at (800) 429-7626, tap into our online chat or stop by a local Elevations branch. We’d love to welcome you to Elevations.