Life as a student looks very different this fall—as does the first day on the job for recent graduates. One way to help prepare young adults for whatever lies ahead is by teaching them basic financial skills during these transitional years.
As a mother myself, I’m seeing firsthand the difficulties of planning for such an uncertain future: My son is starting his senior year at Ithaca College. And while I don’t know what the next few months will hold for my son’s situation, I have been using this time with him to share key money advice that I learned at a young age.
Whether your children are preparing to go back to school or are staying home longer than anticipated, take advantage of this time to help them develop sound financial habits and prepare for the uncertainties ahead.
Here are five tips that all young adults should know:
Track your spending and create a plan. Getting in the habit of tracking expenses will help you identify excess spending and find areas to save. Put together a budget that tracks your expenses and update it regularly as your spending habits shift. As we’ve seen this year, financial situations can change rapidly, so the spending plan should reflect any changes to your lifestyle.
Start saving and create an emergency fund. An emergency fund can provide peace of mind and act as a buffer for unexpected expenses. One of the benefits of tracking your spending is that it will help you find money to save—even if it’s just $20 a month from old recurring subscriptions that you can cancel, the important thing is to start building your savings muscle. At Bank of America we have an account geared specifically for young adults called the Advantage SafeBalance checking account, which allows students to bank without the worry of overdraft or nonsufficient fund fees.
Make savings automatic. With everything going on these days, at some point we’re all likely to forget about sticking to a savings plan. Consider scheduling automatic savings transfers so it’s one less thing on your to-do list. These reoccurring transfers are also a great way to build up an emergency fund—schedule auto-transfers for payday to pay yourself first and ensure you’re making progress toward your savings goal.
Be smart with credit. When used responsibly, credit cards are a great way to manage expenses and build good credit, which can come in handy when signing a lease, for example. To use a credit card wisely, plan out purchases in advance, keep a close eye on your expenses to avoid overspending and strive to pay on-time and in-full. When possible, choose a credit card with rewards that match your existing spending habits. Use your spending tracker to see where you’re spending the most (groceries, online shopping) and do a little research to find out which credit card has the best rewards for that category.
Tackle financial stress, head-on. Being a student is stressful enough under normal circumstances, but add in the financial stress of the coronavirus, and young adults can feel overwhelmed. Confront financial stress by focusing on the main sources of anxiety—maybe it’s paying off credit card debt or
saving for future student loans. Set reasonable goals to pursue in the short term and establish an easy to follow, monthly plan.
We’re living through a difficult time, but we’re all working through it together. As young people prepare to go back to school or enter the workforce, having healthy financial habits can make all the difference. Regardless of what your young adult is planning next, take advantage of this time together to help them build the skills that will guide them toward a financially secure future.
About Elaine Healey
Elaine Healey is Maine Consumer Banking Market Leader. She serves as a catalyst for driving transformational change in our financial centers by working with the Financial Center Manager in how they lead, coach and manage and our Relationship Mangers on their mission of helping financial lives of clients through deepening efforts. The Market Leader is accountable for influencing and enabling leaders to execute in a rapidly changing environment, business controls, resource management, talent planning at all levels and supporting the sales/deepening within the financial centers. Elaine joined Bank of America in 1988 as a Banking Center Manager Trainee. During her 30+ year tenure, she has held several management positions in the Consumer Bank including several banking center manager positions, District Operations Manager, Consumer Market Manager, Building Relationships with Customers Program Manager Change Consultant, and Area Business Operations Manager. Elaine’s strong passion for coaching and change management have helped her to lead and mentor many associates to promotions throughout her career. This passion was a leading driver in her achievement of SVP in the consumer bank. Elaine actively promotes the company’s commitment to diversity and inclusion internally and externally, including being a former board member of the United Way of York County, Lead for Women, Military affinity group and participating in various charity events.