First Columbia Bank Lifestage Strategies

GETTING STARTED

Financial advice for young adults entering the work force

Laying the right financial foundation as you start your career is the key to future financial success.  At this particular lifestage, TIME is your greatest asset. Consider that each dollar you save in your 20s can be worth ten times as much as one saved in your 40s. Through the power of compounding (meaning that as your savings grow, you earn interest on a larger and larger pool of money), the beginning of your working life is the prime time to start saving towards retirement. The unfortunate reality is that many people don’t want to think about, or worse yet, act on this principle. But for those who do, the rewards can make a real difference at retirement. The most important thing early on in your career is to just start saving, even if it is just a little.   

During this time, young adults have the sometimes daunting and difficult task of figuring out how to manage spending and saving money within the constraints of their income. Here are some steps to take now to put your financial future on track:

1. Identify your short, medium and long-term goals and budget accordingly

Your short term goals of less than five years might encompass a wedding, honeymoon, furniture or a new car.  Medium term goals could include the purchase of a home and financing your future children's college education, followed by long-term retirement goals.  Thinking about these goals will help you determine how to spend and save your money now.

Click here to learn more about our personal savings products designed to help you meet your short and long term goals.

2. Build assets through saving a set percent of your income
It may be wise to invest in CDs or money market funds for your short term goals and the stock market for your longer term goals. Historically, the stock market has outperformed other types of investments over comparable time periods, but it’s not for the faint of heart.
3. Pay yourself first
You should be sure to take advantage of your 401(k) retirement plan if one is available from your employer. And, if they offer a matching contribution, make sure you at least contribute enough to be eligible for the employer match. Otherwise, you are leaving money on the table! If you don’t have access to an employer-sponsored retirement plan, consider opening up an IRA account.
 
4. Establish an emergency fund
A good guide is to save three to six months worth of living expenses to cover rent or house payments, utilities, car payments, food, transportation and insurance into a separate bank account that could be easily accessed in the case of job loss or uncovered medical expenses.  Don't use the money for anything else.
5. Save time and moneywith First Columbia Bank’s convenient online banking, e-statements, online bill pay, and no-charge ATM services

You’ll reduce the time and effort it takes to pay your bills—and help the environment as well.

Click here for more information and to enroll in our FirstLink Online Banking Service.

6. Take your hometown bank with you—wherever you go

No matter where life takes you, with our mobile banking services, you can access your account right from your mobile phone.

Click here to learn about our FirstLink Mobile Banking Service.

7. Set up direct deposit
Your paycheck will go straight to your First Columbia Bank account. This will save trips to the bank and help you stick to a budget. Be sure to split your deposit—put some in checking to cover expenses—then put something into savings.  Even if you start with just a small amount, you’ll be automatically saving every pay day.
8. Borrow wisely
Avoid high-interest credit cards and pay off your credit card debt monthly. Work with First Columbia Bank for your lending needs including home mortgages and home equity lines of credit.

Click here for more information about our lending services.
9. Understand your credit report

Your financial behavior over the past seven years, including how much credit you have, how long you've had it and whether you pay your bills on time is information included in your credit report. Three credit reporting agencies — Equifax, TransUnion and Experian — maintain these reports, and lenders buy them to help them decide whether to offer you a prequalification. Your credit report also carries your credit score ranked between 300 and 850 that many lenders use to decide whether you are creditworthy and will repay a loan. Your credit score can also influence the interest rate you pay. In many cases, the higher your score, the lower your interest rate. Your credit score is available from the three credit reporting agencies:

 

Tips for Effective Financial Management

  • Pay off your credit card debt. It is senseless to pay 13 - 20 percent interest on credit card payments while your savings accounts earn one or two percent.
  • If you cannot pay off your credit card debt, pay more than the minimum payment each month which in some cases will only cover the interest charges.
  • Don’t worry too much about paying off student loans early. These normally have a much lower interest rate than credit cards. By making low payments on student loans, you'll have more money to reduce high-interest credit card debt.

Financial Calculators for those Getting Started...

These calculators can help you determine what you need to achieve your goals and stay on budget.

Compound Interest Calculator Cool Million Calculator

 

For help determining the best accounts and products for sound and productive money management as your are getting started on your financial journey, please contact us at 570.784.1660 or email us.