Starting out on your own comes with a lot of excitement and also a healthy dose of reality.
But don’t worry – First American Bank is here to help provide recent college grads with some helpful financial advice to make the transition from college to real life go smoothly. Learn how to pay off student loans, how to save money after college and create a budget plan you can stick to.
The scary truth is that 62.5% of Americans over the age of 30 are still paying off their student loan debt. If you found it difficult saving money as a student, you might think it’s inevitable for you to fall into this statistic as well. Here are some tips for paying off student loans quickly and efficiently to prevent that from happening. Before mindlessly putting money towards your loans, it’s important to understand that your payment goal should be reached within ten years. If you do not stick to this timeframe, your interest will increase, and your loans will grow even bigger. Even if you have a small amount of money at the moment, begin to pay what you can to keep these loans from growing.
Consider all of the times you received money on your birthday or for a holiday from family members. All of that cash is perfect for saving because you do not rely on it as regular income. Instead of spending it on a brand-new pair of sneakers, immediately put that money towards paying off your student loans. The money will be out of sight, out of mind, and you won’t miss it.
Now that you are on your own, it’s important to start creating a budget. To help with this, utilize the many online budgeting tools you have available to you. Feel free to visit our budget calculator . In addition, always remember to base your budget on your take-home pay rather than your salary, since this will give you a more realistic view of what you can spend.
Your credit score matters because it is used by institutions to determine their risk level if they give you a loan. The ideal credit score is between 670-739. You can learn more about how credit scores are calculated here. If you plan to borrow money for any reason, like buying a car, you must have good credit. Good credit can make the difference between having a 3% and a 6% interest rate on your loans. In order to have good credit, always pay your bills on time and try to pay them in full. If this is not always possible, make sure to at least pay the minimum, but avoid doing this often. You should also make sure to not exceed what you are allowed to borrow, or it will hurt your credit score. Also note that having good credit may affect your ability to secure employment. Some employers look into your credit to have an idea of how responsible you are.
As a recent college grad, you will need to minimally have both a checking and a savings account.
Checking accounts allow you to withdraw from and deposit money into your account. Your checking account can be accessed through Online and Mobile Banking, through checks, ATMs and at the branch. You will likely have your paycheck direct deposited into your checking account. There are many types of checking accounts that vary based on whether they are interest-earning, have fees, allow for a low balance and more. At First American Bank, we offer several checking options.
Savings accounts allow you to store your cash in a safe place while earning a small amount of interest. They are generally used for those who want to begin saving their money for a rainy day or unexpected expenses, but don’t need them for daily life and expenses. There are several types of savings accounts that differ depending on the minimum balance requirement, interest rates, term and other factors. First American Bank has different savings options, including money market accounts and CDs.
Whether you open a checking or a savings account (or hopefully both), it is important to always check to see what promotions are being offered because you might just find some cool rewards coming your way.
Whether you are a parent or a student (or both!), please reach out at any time to learn more about how we can help. We work with individuals in Illinois, Wisconsin, and Florida and beyond.