Money Moves
One of the best parts about being an adult and moving on to work or college after graduation? Eating leftover cake for breakfast. One of the toughest parts? Being responsible with your money.
We’ve collected some of our best tips for managing your money and staying on top of bills and budgets, plus some terms that you should know, to help smooth the transition into financial independence.
Move #1 Build a Budget Note your income and fixed expenses (rent, phone, internet), then spend a couple of weeks tracking your variable expenses (groceries, entertainment, gas). Average those out and look for places to trim costs. Find a budgeting app (many banks offer their own) and use it regularly! Wherever possible, plan ahead and put money aside for major expenses like a holiday, vacation, or car repair. Move #2 Build Your Credit A good credit score is necessary for many aspects of adulting, like securing a car loan, leasing an apartment, and even opening new financial accounts. To maximize your credit gains, open a credit card with the lowest possible annual percentage rate (APR); use your card to autopay a fixed, affordable expense (Netflix?); and set your bank account to autopay for that expense each month. The trick is to pay the bill after your statement arrives but before the billing due date. Move #3 Build your Savings When you have limited income, it can feel impossible to have a savings account or emergency fund. But remember that even tiny amounts add up over time. Before you spend even a dime of your paycheck, tuck away any sum you can in a separate, high-yield online savings account. Many workplaces will even split a direct deposit for you. Move #4 Build your Financial VocabularyGet to know these terms! APR: the percentage of your unpaid credit card balance charged as interest each month after the due date; may increase sharply if you miss a payment. Credit report: a formal record of your past and present borrowing, used to evaluate your financial stability when opening any account, leasing an apartment or vehicle, or even applying for certain jobs; review yours for free each year at AnnualCreditReport.com. Credit score: rating based on your credit history (shown in your credit report), used to determine interest rates and loan eligibility; a good credit score starts around 670. Gross income / Net income: gross income is your total income before taxes and deductions; net income is your actual take-home pay. Minimum payment: the lowest amount a credit card company will accept as payment toward your balance; paying only minimums will dramatically increase the time it takes to pay off the full debt — and therefore increases interest. Payday loan: a predatory lending scenario; you get a small amount of money immediately, and it is automatically repaid from your next paycheck, along with often exorbitant interest rates and fees. Security deposit: money paid upfront when you lease an apartment to cover damages; often equivalent to one month’s rent; refunded in full or part when you move out. Withholding: federal deductions from your paycheck for Medicare and Social Security; increasing your withholding results in smaller paychecks but a higher tax refund, while decreasing it does the opposite.
