There are so many ways to save in this world, so how are you supposed to know what way is best for you as a young adult? Let me take you through how my financial journey started and grew to be what it is today.
Mostly everyone’s parents open them a basic savings account when they’re a baby. That’s what my parents did too, so I already had an account established at my local credit union. Why did my parents choose a credit union over a bank? Credit unions are known for being owned by their members and not by stakeholders. Each member owns a piece of the pie. Loan rates are also a lot lower than at banks, but that will probably be more helpful when you’re older and want to buy a car or your first home (it’s not that far down the road guys! Time flies). So I have this established savings account thanks to my parents, now what?
What got me interested in my finances? My first job of course! I started as a dishwasher at Karsten’s Luncheonette. My first paycheck came, then my second and third, and before I knew it I was growing my savings. I’d go to the drive thru and get $20 for gas and McDonald’s lunch and save the rest.
My senior year of high school began, and as graduation neared, my Dad started talking more about establishing my credit score. A credit score is something financial institutions use to decide whether or not to give you a loan or credit card and what your interest rate or down payment may be. It’s dependent on making timely payments and also your length of credit history (starts when you start paying on your first credit line or loan). Some insurance providers and employers look at your credit score too, so it’s important to maintain it. My Dad and I marched into the credit union and applied for the Holiday Loan Special. He cosigned for me to get a $1,000 loan.
Why the heck would my Dad cosign for a loan with an irresponsible 17-year-old?! I knew I was responsible enough to handle it, but he didn’t and just put his trust in me. What helped is that I already had $1,000 or more in my savings account, so we knew I could pay it back. My advice is to start with whatever you can afford. Bulk up your savings as much as possible, take out a loan for an amount you have, and make monthly payments on it until it’s paid off. You will owe more than you take out the loan for because of interest, so definitely consider that as well and discuss options with a teller, loan officer, or financial counselor, and of course, YOUR PARENTS!
The summer before I went to college, my parents told me it was time to get a debit card. My parents and I went into the credit union, signed some papers, and I got my card and PIN within a week or two in my mailbox. I started using it and it was so convenient! I could get money out of the ATM whenever I needed it even if the branch wasn’t open and could use it at any store or restaurant instead of always needing to carry cash. It also came in handy when I officially went to college. Even after I started at MSU (Go Green!), I could still use my debit card at any campus ATM to access my funds at CCU back home. There was no fee because both MSUFCU and CCU were co-op credit unions. Any ATM with the same co-op logo on it that was on my card didn’t have a fee. I opened an account at MSUFCU thinking it would be more convenient to use that account than my CCU account, but I think I maybe used that account once the entire four years I was down in East Lansing. I was just more comfortable working with my hometown credit union 5 hours away than planting roots somewhere new!
I also lengthened my credit history when I got my student loans for college. This is just an example, please don’t go out into the world and get a student loan for fun. THEY ARE NOT FUN. Get one if you need it to afford your schooling, and definitely shop around for the best interest rate! Being a first-generation college student, I blindly applied for my loan through whatever loan servicer my college shoved in my face because I didn’t have anyone to help me do any research. Don’t just assume your school has your best interest in mind, because maybe they don’t, but I know for a fact YOU do! I started paying on my loans like everyone else 6 months after I graduated and of course I am still paying on them. However, each payment is positively affecting my credit score each month as I pay down that balance and make on-time payments.
You may be thinking, “I’m 17 years old. I don’t care about my credit score. I’m not getting a credit card or buying my own car for a long time.” That was true for me, too. I didn’t apply for my first credit card until I was 22. I didn’t purchase my first vehicle until I was 23. When I applied for my first card, I got the Platinum VISA card with the lowest interest rate. When I financed my first vehicle, I was able to get a nice, reliable vehicle for an interest rate and monthly payment I could afford. All because of my length of credit history and the timely payments I made on my holiday loan and my student loans. In closing, my advice is to start building credit as soon as you can. If you’re a minor, that may mean discussing it with your parents. Calcite Credit Union also has financial counselors on staff at each branch to help anyone with making important financial decisions if you need further assistance. Really, you should just talk with who you trust the most! If you’re more comfortable talking with a teller, they’d be more than happy to help you, too. Hope you all have a safe and fun Halloweekend!