Starting Out Strong - Money Management for Young Adults

Maybe you were taught money skills. Maybe not. Either way - we can all agree that we always want more for our kids and their successes.

If you have a young adult heading to college, trade school, military or joining the adult workforce in other ways, NOW is the time to start them off with strong and smart money habits.

GOOD NEWS: Kentucky now requires a financial education course before high school graduation, so reminding your recent graduate about money management basics and encouraging them to view financial learning as a lifelong process can go a long way.

Here are a few simple tips to help young adults - and grownups of all ages - manage money more effectively.

1. Budget, Budget, Budget

For your adults living on their own for the first time, it can be both exciting and stressful. Many may not be used to the cost of life's basics. Help them think through, and jot down, all their monthly costs and estimate one-time items like security deposits or college textbooks and supplies.

By just going through this exercise, it's easier to pinpoint unnecessary items that can be cut. It can also help clarify for students whether a part-time job or student loan is still needed to fill any gaps. Be sure to discuss which expenses will be covered by parents or financial aid and which will be the student's responsibility.

The importance of budgeting - for adults of all ages - can't be understated as it helps chart a clear course for you to follow. This process is especially critical whenever our costs or incomes change, to ensure we're staying on track.

2. Save What You Can.

Even putting away a little bit into a Savings Account each month can make a huge impact over time. By depositing a portion of each paycheck automatically or just socking away graduation and birthday money, a young adult can build an emergency fund to handle unexpected expenses. Choosing a free checking account and setting up direct deposit can also help, especially if your financial institution offers early pay, which gives you access to your payroll funds up to two days early. Abound offers a Get Paid Early* program to help Members get deposits faster.

Having savings and early access to paychecks can prevent costly borrowing at the last minute from lenders pushing convenience over affordability. Those with more life experience may want to focus their efforts on specific goals such as buying a car, purchasing a new home or improving their credit score.

Ask if your local credit union or bank offers online financial education modules or other free resources.

3. Be Smart About Borrowing.

Life happens and you will undoubtedly run into the unexpected - whether it's a flat tire, urgent care visit or a larger expense. It's easy to find yourself paying very high-interest rates on very easy to get credit, especially as a young adult. Take a pause before you sign up for that new credit card or take advantage of a "Buy Now, Pay Later" offer. Loan payments can have a big impact on a monthly budget or even create a long-term cycle of debt if you can't meet minimum obligations. It's always a good time to evaluate your options.

Interest rates, fees and terms can vary widely depending on the lender. Start with your local bank or credit union to understand what's available. A low-dollar limit secured credit card, which is tied to your savings, may be a responsible and safe way to build credit without racking up unnecessary debt.

4. Keep on Learning and Ask for Help.

Remember, learning is a lifelong journey. It's never too early, or too late, to learn more about money management. We believe financial education is the key to healthy and strong communities and encourage you to make the most of the tools available to help you along your financial journey.

Anyone can access the free tools available on Abound Credit Union's website and we encourage our neighbors to stop by for in-person financial advice. A trusted financial partner is always happy to help!

Marc Prasch, Chief Operating Officer

Abound Credit Union