Recent college graduates are just getting started on their career. Student loans and living expenses outpace income. Many of them use credit cards to help with the costs. This can begin a financial downward spiral that can get out of control quickly. Before that happens, let us help you tighten the reigns on your finances.
#1: Use Credit Cards Sparingly
Credit card debt with high interest rates could come back to haunt you for many years. It’s better to sacrifice some of your wants, so you can afford the needs in your life. Weening yourself off of credit cards will enable you to use cash to pay for most of your expenses, alleviating any debt payback later.
#2: Save and Pay Back Debt
A savings account that increases in value every month may make you feel good, but adding to credit card debt negates that savings. It’s better to pay more towards debt than saving money. Interest rates will require you to pay more in the end, so you’re losing money when you put more money into a savings account than towards debt. The best plan is to follow an 80/20 rule. Any cash left over after bills are paid should be split up with 80% going to debt and 20% into savings.
#3: Use and Pay Off Credit Cards
If you haven’t started carrying a balance on a credit card yet, don’t be afraid to get one. The best way to establish credit is to use a credit card, responsibly. This means charging something to a credit card and then paying it off the next month. The more you do this, the higher your credit score will be, which will help you secure loans someday when you want to make bigger purchases.
Stanford Federal Credit Union is here for you helping you get the most out of your finances. We have savings accounts, checking accounts, and credit cards for every stage of life starting when you’re a young adult with your first job to retirement. Become a member of a credit union that cares about you and your financial health today, tomorrow, and for the rest of your life.