How to Choose a Bank Account After College

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. 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?

 

So You Want to Move Out of Your Parents’ House? Try These 8 Strategies

As millennials, we want to do it all, be it all and see it all. But there’s one big thing holding many of us back from achieving our version of the American dream — financial independence.

In fact, according to ABODO’s analysis of U.S. Census data more than one-third of millennials have yet to leave the nest. And the proportion of older millennials — ages 25 to 34 — who are living with their parents has reached 19 percent, the highest point ever, according to the Associated Press. Why the high numbers of millennials residing in their childhood basements? Economic necessity.

The good news? Your circumstances right now don’t have to determine your possibilities for the future. Here are 8 strategies for achieving financial independence and moving on out of that musty basement:

Know where you stand today

It’s time to have a heart-to-heart with yourself about your current financial situation. When I first started on my journey to financial freedom, the first thing I did was review my bank statements from the previous 90 days. I was shocked to find out that $20 here or $50 there added up to hundreds of dollars each month spent on things I didn’t need.

Apart from coming to terms with your spending habits, it’s important to calculate your total debt number. Try creating a simple spreadsheet to list all your student loans and credit cards. Good ole fashioned pen and paper will work just fine as well.

The purpose of this exercise isn’t to throw yourself a pity party but rather to lay the groundwork for getting to where you need to be.

Beef up your financial knowledge

It can be really overwhelming to start learning everything there is to know about personal finance. However, online bank accounts like Chime can help you make proactive money decisions.

Start with the basics such as understanding how to create a budget, manage debt, save for retirement and invest for the future. When you’re just starting out, it’s important to do your own research but remember there’s no shame in asking for help from a financial expert. You can search for a fee-based financial advisor here.

Work backwards

Armed with some financial knowledge, it’s now time to set your plan into motion. Choose one big picture goal that you’d like to achieve over the next 12-24 months. For example, moving out of your parents’ house.

The cost to move out will likely be several thousand dollars including a security deposit on an apartment, first month’s rent and buying furniture. Once you’ve come up with the amount of money you’ll need, divide this up into months. Monthly savings goals are a lot more manageable and you can give yourself a small reward each time you achieve them — #winning.

You can use this same approach to figure out your monthly expenses when you move out.

Automate your savings

Having a plan means very little if it’s hard to execute. One of the easiest ways to save money is to take the guesswork out of the equation completely. Chime makes it easy for you to achieve this goal through automation. With a Chime bank account you can save when you get paid by automatically directing 10% of every paycheck into your savings account.

As a bonus, if you use your Chime card to make purchases, Chime will round up each purchase you make to the nearest dollar, and transfer the roundup amount from your Spending Account to your Savings Account.

Get aggressive with paying off debt

There are so many advantages to eliminating your debt sooner rather than later. Apart from achieving financial zen and saving on ridiculously high-interest costs, getting rid of debt frees up your income. Imagine a life without payments — the possibilities are endless!

There are lots of ways to pay down debt quickly such taking on a side hustle or two, dramatically reducing your expenses or considering tools such as credit card balance transfers.

Go on a fiscal fast.

You could also try out a fiscal fast. This is like going on a diet but for your finances. The idea of a fiscal fast is to completely eliminate all non-essential spending – like coffee runs – for a specific period of time. Short fasts last only a few days whereas more extreme ones can last an entire month. Along with jump-starting your savings goals, fiscal fasts also teach you to be financially disciplined and even creative.

The key to success is to transfer all the money you would have spent during the weekend or month into a savings account. I’ve done five fiscal fasts in the past year or so. Each time I’ve saved between $250 and $300. This helped me get rid of my credit card debt a lot quicker.

Invest in yourself.

You are your biggest asset. Take the time to invest in your personal and professional development and watch the returns roll in. You might choose to start with investing in your career or professional advancement by learning new skills, participating in training sessions, or taking a new course. These steps can set you up for your next promotion and possibly even a raise.

There’s also huge potential in exploring your creative side. Lifehack notes, “creativity, in any form, helps us to grow personally and professionally, to view problems and solutions in different ways and to utilize other parts of our mind that may have been previously untapped.”

Throughout this journey, don’t neglect self-care like eating well-balanced meals and exercising. Remember, health is wealth.

Check your thoughts regularly.

You might be surprised by what positive thinking and even meditation can do for developing good financial habits. These tools can help you stick to your goals, bounce back from setbacks and reduce anxiety when it comes to your finances. Now, it’s time to go and do! Start implementing even one of these strategies per week and start writing your financial independence story today.

 

Money Advice for College Grads: How to Create Long-Term Financial Success

Graduation is right around the corner. You’ve worked hard and earning your college degree is a huge milestone — one of the biggest in your life.

Now comes yet another challenge: Managing your finances in the real world. Indeed, as you set out into the working world, you’ll need to keep in mind living expenses, like paying rent and household bills. It would also benefit you to start an emergency fund and begin saving for retirement (even if it’s 40 years away). And don’t forget your student loans, which won’t go away on their own.

Take it from me, getting on the right path now sets you up for long-term financial success. Here are some tips to get you started:

Live within your means

If you’re one of the lucky few, you may already have your dream job lined up after graduation, which means you can say goodbye to a strict noodle diet or a minimal college student budget.

Yet regardless of what type of job you have, you’ll still need to learn to live within your means. To do this, you’ll have to take a realistic look at your income and expenses. Even if you lived in an off-campus apartment with roommates during college, going out on your own means you’ll have more expenses like utilities, Internet service fees, groceries, and possibly a security deposit (sometimes first and last month’s rent). Then there are other necessities, like transportation and insurance costs.

Having a budget in place is a smart way to make sure that your earnings can cover these expenses, ideally with money left over to save. If not, you may need to find ways to free up some cash, like getting a roommate, taking a side hustle, or cutting back on discretionary purchases, like gym memberships, eating out or cable subscriptions. Using a budgeting app such as You Need a Budget or Mint can help get you started.

Bank on a new bank

Finding a good bank that has your back should be high on your list and can save you a significant amount money. Most big banks rely on charging their customers fees and other unnecessary surcharges like minimum balances, overdraft fees, foreign transaction, fees, etc. In fact, the average American pays around $329 in bank fees every year. If you currently have a student checking account with no fees, make sure to read the fine print: those fees might kick in once you graduate.

A mobile banking app like Chime, on the other hand, is built with the sole focus of helping Member’s save money. There are monthly fees, no minimum balances, no overdraft fees, and no foreign transaction fees.  Chime is also an Automatic Savings app. Every time you use your Chime Visa Debit card, the app rounds up the spare change and deposits it into a Savings Account. Think about it this way: The money you save can also be put towards paying down debt or bolstering an emergency fund.

Pay down your debt

The average college graduate carries more than $37,172 in student loan debt, and those numbers are rising — over 275 percent in more than just a decade! This might be your biggest expense, and it’s your job to make sure you keep up with your payments. If not, you could risk going into delinquency or default.

When paying off your student loans it’s important to first, take note of how much you owe. Is it a mix of federal and private loans? You can access your total federal balance at the National Student Loan Data System. For private loans, you can check your credit report to see what you owe.

Aim to pay as far in advance as possible so you won’t fall behind if you encounter a lean month here or there. You can also structure your payments so that you pay the most each month toward your loans with the highest interest rates. Finally, you can make the minimum payments to those with the lowest interest rates.

If you are struggling to meet your payments and you have federal loans, you can also apply for a deferment or forbearance. These are types of temporary holds on your payments which allow you the time to regroup financially. Deferments can last up to three years, and if you can prove financial hardship, forbearances last one year. If it’s still too much of a hardship, consider refinancing your loans for new interest rates and payment terms that align better with your finances.

A final tip: You may also want to consider loan consolidation, whereby you can combine several loans into one new loan with a new, refinanced interest rate and/or extended payment terms, lowering your overall monthly loan payment.

Concentrate on your credit

For most college students, a campus meal plan and a debit card may have been your two main choices of currency. So, if you’ve never really used credit before, take this as a chance to start building your credit profile.

Building your credit up is essential because eventually, you’ll need credit to buy a house, a car, major appliances or even furniture for your apartment. In each of these situations, you may need to borrow money and in order to do this, lenders will want to know if you’re trustworthy enough to afford a loan and pay it back. For that, they’ll want to see that you have a history of using credit responsibly. In other words, lenders want to see that you don’t borrow more than you need and that you pay your bills on time. Welcome to the world of credit.

A credit card is the perfect “credit builder” because it gives you a chance each month to charge purchases to your card and pay it back at the end of each billing cycle. There are an assortment of student credit cards and secured credit cards designed for people with little to no credit history. To help improve your credit, it’s also important to pay off your credit card in full each month and avoid carrying a balance. This way you’ll be less likely to go into debt or be faced with paying off accrued interest charges.

Of course, using a credit card responsibly doesn’t mean you should say goodbye to debt altogether. Spending too much on credit is a signal to creditors that you rely on your credit card too much. For this reason, keeping a debit/checking account in your financial mix is a good way to offset your spending. We recommend the Chime Visa debit card, which encourages you to save as you spend. With each purchase, your transaction is rounded up to the nearest dollar and the rounded up amount is automatically deposited into your savings account.

Start investing

It’s OK if you think you’re too young to invest, or if you feel this is only something reserved for rich people or older generations. Those are feelings we all tend to have since there is truth to the idea that you need money to make money. So how does a recent college graduate saddled with bills even think about investment options?

For starters, you don’t have to be a stock market master to start investing. Investing is essentially saving money in a way that makes it grow via the power of compounding interest. When you begin your first post-graduate job, a good way to begin investing is to find out if your employer sponsors a 401(k) retirement plan with a matching contribution. If so, your employer will match your contribution up to a certain percentage. This is essentially free money.

If no 401(k) is available or if you’re self-employed, you can look into a Roth IRA. For 2017, the maximum you can contribute to this tax-advantaged retirement account is $5,500 if you’re under 50; $6,500 if you’re over 50. With a Roth IRA, your deposits are made with after-tax income and withdrawals are tax-free.

Whatever you do, don’t fall into the comfort zone of thinking that it’s too early to save for retirement. The earlier you start, the more your dividends and earnings will build. This can leave you with a nice, big nest egg when retirement rolls around.

On a final note, graduating college isn’t just about earning a degree; it’s a chance to reinvent yourself personally, professionally and financially. Take this time to make some changes to your money habits and you’ll set yourself up for a lifetime of success.

 

3 Easy Changes to Decrease the Cost of Your Student Loan

The materials in this article are provided for informational purposes only and do not constitute financial advice

Graduating in 2009 seems so long ago, but if you’re like me, your student loans are still looming large. Turns out, student loan debt is the number one financial concern among Millennials (hello, fellow youths!) with over $1.2 trillion, yes, trillion in student loan debt.

For years I thought I was being responsible, making my minimum payment each month. Little did I realize that I was not doing myself (or my future self) any favors. Next time you get a statement regarding your loan, read it. Chances are most of the minimum monthly payment pays for interest on the loan, not the principal loan amount.

Paying only the minimum may make things easier in the present, but it can greatly extend the life of your loan and end up costing you considerably more overall. The more you pay now, the less you pay over the life of the loan.

Nobody wants to think about budgeting, but there are easy ways to cut back on your spending so you can apply that savings to your student loan payments. The first step is understanding where your money is going (and where it doesn’t have to be going at all). The next step is cutting back and applying those savings to help pay more than just the minimum.

Need some ideas on where to start? Here are some areas where I cut back:

The Cable Bill

Cutting the cord can be one of the most cost-saving measures you can take. I did it a few months ago and my cable and internet bill went from $120 to $30 for just internet. That’s $90 in savings, every month.

Think about it. Your friends and co-workers may still be talking about the premiere of the new Daily Show on Monday, but did you actually watch? Probably not. I didn’t either. Instead, I enjoyed drinks with friends after work and then caught up on the highlights, like Trevor Noah’s opening segment.

Chances are, you’re watching less TV and more Netflix. And with the average cable bill hitting a high of $99 this year, that means you’re paying your cable company when you don’t really need to. Get rid of the cable, keep the internet and start streaming. Today there are more choices than ever–from Hulu to HBO Now, to Vessel– for awesome content on demand.

Savings: $90 per month

The Morning Coffee

My morning coffee routine is hallowed ground. For years I religiously paid tribute to the Starbucks Siren. Turns out that $2 tall coffee every day really adds up. On average, I was spending about $40 a month on coffee.

Needless to say, I’m no longer paying for coffee on my way to work. I’m becoming my own barista and making coffee at home. I have become a master of the pour-over method. It’s simple, doesn’t take much effort, and tastes great. Try this method once, you’ll be addicted. It is arguably the best way to drink coffee.

Projected Savings: $30 per month

The Weekday Lunch

In downtown San Francisco, there are countless options for lunch right outside my office. But buying lunch five days a week gets expensive. It’s tough to find take-out lunch options for under $10 per day. Even when I find cheap eats, I’m averaging $50 per week and $200 per month-minimum. That’s my student loan payment right there.

I now bring food to work most days–leftovers from the previous night or a sandwich I made in the morning–and have cut my weekly lunch bill in half.

Project Savings: $100 per month

These three small, thoughtful changes allowed me to save $230 every month. I doubled the monthly payment amount on my student loan.

If I’d continued to pay the minimum $200 payment on my $25,000 loan, it would have taken 219 months to pay off. At the end that 18 year period, I would have paid $18,611 interest. Do you know what you could do with $18,000? I do. Buy a water propelled jetpack, travel abroad, or travel abroad on my water-propelled jetpack.

On the other hand, by applying the savings I just made to my student loan and increasing my payment to $420, the amount of interest I’ll pay over the life of the loan goes from $18,000 to only $5,581. The life of my loan would also decrease from 18 years to 6.

Small changes really add up. When you apply these changes to help pay a student loan, your savings can go from a few hundred dollars a month to thousands of dollars over the years.

And when that happens, it frees you up to start pursuing your passions, even if it doesn’t include a water-propelled jetpack.