Whether you're in school, working or simply exploring your options, you'll need to get your finances in order. Get started with these tips.
- Set goals. Are you paying for college, hoping for a new car or dreaming of a backpacking trip across Europe? If you know what you want, it may be easier to sacrifice now for the payoff later.
- Start saving early. Strive for 10% of your earnings, but if that's not doable, save as much as you can. If you're working, be sure to participate in your employer-sponsored retirement plan, if offered (especially if there's a company match). If you have earned income — even from part-time work — you can open an IRA (individual retirement account). With decades until you reach retirement age, even small amounts can reap big benefits. For example, suppose you are 18 years old and will retire at age 67. If you put aside just $50 a month for 49 years in a tax-advantaged retirement account earning an average of 7% a year, you could have a quarter million dollars when you retire.*
- Avoid debt. If you do use a credit card, pay off the balance each month. According to a recent survey, the average college-age millennial has $559 in credit card debt.** If you pay only the minimum each month on a store credit card with a 21% interest rate, it could take 29 months to pay off that amount and cost $156.40 in interest charges.***
- Protect your personal information. Keep identity thieves from stealing your information. Use strong passwords and change them regularly. Avoid using public Wi-Fi for online banking. Protect your personal identification number (PIN), and shield the keypad from view when using an ATM. Review your financial statements each month to make sure there are no fraudulent transactions.
- Seek advice. Studies show that individuals who seek financial advice tend to make better financial decisions. At Novation, we're committed to helping young people on the path to financial security. Call (800) 369-6628 or visit www.novation.org today to learn more about our products and services.
* Rate of return is provided for information only and is not intended to represent the return of any specific investment. No taxes or fees are taken into account.
** Source: TDAmeritrade's 3rd Annual Generation Z survey, press release, Sept. 11, 2014, amtd.com.
*** Assumes minimum payment of 3.5 percent of balance or $25. Source: Minimum payment calculator, creditcards.com. Based on a $559 balance at a 21 percent annual percentage rate.