If you’ve recently graduated from college and you’re just getting started on your own, one of the most important pieces of the puzzle is sorting out your financial life. The foundation that you lay today will allow you to achieve long-term goals, including retirement, owning a home, traveling, having a family, and starting a business. But it can be challenging to know what pieces of the finance picture matter the most, and how to get started. Here’s a closer look at the financial services every millennial needs.
Personal banking: The foundation of a healthy financial services portfolio is your personal banking set up. Choose a bank that specializes in personal banking products such as checking accounts, savings accounts, and certificates of deposit. Look for options that don’t charge monthly fees, have features such as mobile banking and online banking, and that offer interest or rewards. While these may be minimal, every dollar counts and it’s a great way to get started.
A credit card: Establishing and responsibly using a credit account is important to your future. Use your credit card to charge below the limit and pay your balance in full each month. This will help establish that you’re responsible with the credit that lenders extend to you and make it easier for you to qualify for major investments such as business loans or a mortgage down the line. A credit card also provides some financial cushion in case of an emergency. Just resolve now to remember that trips to the movies, new clothes, and takeout food don’t constitute an emergency.
An emergency fund: As soon as possible, it’s important to start saving an emergency fund. Your emergency fund should be touched only in the case of a dire emergency; it’s up to you to determine what qualifies. Experts recommend anywhere from three to twelve months of expenses in your emergency fund. This liquid cash reserve gives you the peace of mind needed to live in today’s volatile economy, in case you lose your job, get sick, or some other challenge strikes.
A debt payment plan: If you’re debt free, congratulations! You’ll be able to have more fun, take trips, explore, and generally experience more of what life has to offer. But if you’re one of the millions that have graduated with student loans, don’t despair. It’s possible to pay down your debts with a debt repayment plan that puts you in the drivers’ seat. Student loans, car loans, and other expenses can really weigh you down. The sooner you pay them off, the sooner you’ll have the financial flexibility needed to work less, stress less, and save more. Create a plan that prioritizes paying off your debts at an accelerated rate, while meeting all your other essential expenses.
Getting the details right on your personal finances can be tough. But it’s one of your top priorities after you graduate from college. By establishing a budget, putting yourself on the road to a responsible credit history, and making sure you have access to top tier banking services will ensure you’re setting yourself up for a successful financial future.
About the author: Kate Drummond is an experienced finance writer. She covers personal finance for a wide range of publications.