After graduation, the world of adulting offers exciting possibilities. But it also presents unique challenges – and a host of unexpected expenses. If you’re like many recent grads, you may be wondering how to make decisions that will put you on the path to long-term financial success.
Although there are many roads leading to a positive financial future, an easy way to start your journey is to establish a bank account that will help you achieve your savings goals. Take a look at our 4 tips for choosing a bank account after college.
Set realistic financial goals
Before we go any further, it’s important to define your money goals. You don’t have to get as elaborate as a vision board if you don’t want to. The important thing is to set goals that are SMART. This means they should be Specific, Measurable, Attainable, Relevant and Time-Bound.
Let’s say that your goals include paying off all your student loans and starting an emergency fund in the next few months. It’s going to be pretty hard to achieve this without putting together a framework using the SMART goal strategy. Here’s an example of the “smart” way to turn your debt-free dreams into an action plan:
Goal: You’d like to build up a $3,000 emergency fund within six months.
This may seem lofty but once you have a goal, you can start working toward achieving it. And, the right bank account can help you get there faster. For example, you can choose a bank account that encourages saving and makes it easier for you to sock money away seamlessly. More on this topic soon.
Explore your options
If you currently have a student checking account with no fees, make sure to read the fine print because those fees might kick in once you graduate. The good news is that you aren’t obligated to stick with your college bank and there are many other options available.
One option is to look into credit unions. If you’re not familiar with credit unions, they function like banks, but instead of being privately owned, they are non-profit member-owned organizations.
When I bought my first car a few years ago, using a credit union allowed me to get a more favorable interest rate than at a traditional bank or through the car dealership. I also ended up opening a bank account at the credit union because the fees were low.
However, one drawback of using credit unions is that they can sometimes are behind the curve when it comes to technology. For example, last year, I needed to make some changes to my account and had to send a fax with my request. I then had to go to FedEx to get this done after I Googled “How do I send a fax?” An online portal would have made my life much easier.
Online banking can meet your needs without the hefty fees
Why are online bank accounts gaining so much popularity? There are a few reasons. The first is that the future is now when it comes to doing business online. And that includes financial services such as banking.
Think about it. When was the last time you set foot inside a bank? If your answer is “when I opened my bank account,” then it probably means it won’t be too difficult to make the switch to free account. In fact, most millennials prefer to bank online.
However, apart from the convenience, banking with traditional “big banks” can cost you a lot of money in unnecessary fees.
About two years ago, when I got serious about my finances and created a budget that fit my personality type, I reviewed my bank account statements for the previous 90 days. Apart from revealing one too many Target runs, I was shocked to realize just how much I paid in banking fees that I didn’t even know about.
Here’s a breakdown of the fees I paid each month:-
- Minimum Balance Fees: $15. Upon further digging, I realized that my “free” checking account came with strings attached. If my account dipped below $100 at any time during the month, I ended up paying a fee.
- Overdraft Protection Fees: $35.
- Service Fees: $1. Not a huge amount but when you are a 20-something, every penny saved counts.
This all added up to hundreds of dollars each year – money I paid to maintain a big bank that I rarely set foot in. Money that I could have used to pay off debt or to save toward a vacation.
If you want to start off on the right foot after graduation, then fees should be a deal breaker when it comes to choosing a bank account. To avoid unnecessary spending. look for an online bank account like Chime that doesn’t believe in unnecessary fees. In fact, if you attempt to make a transaction that is greater than the amount in your Spending Account balance, Chime will actually decline the transaction and immediately send you a push notification through the app to let you know why it was declined. You will always have a real-time update on your finances at your fingertips.
Automate Your Savings
One of the best ways you can win at adulting is to automate your life starting with your savings. Chime makes it easy for you do this in two ways. The first is to help save as soon as you get paid. If you open a Chime bank account and select Automatic Savings, Chime will automatically transfer 10% of every paycheck directly into your savings account.
Another awesome Chime benefit is that you can save every time you spend. Chime actually rounds up each transaction made with your Chime card to the nearest dollar and transfers the round-up from your Spending account into your Chime Savings account.
How’s that for a bank account that has your best interests in mind?