Tips for Building Healthy Financial Habits Early
Robins Financial Credit Union is dedicated to our mission to be Member Focused, Financial Partners, Community Proud. We empower our members with the financial knowledge and resources they need to make informed decisions and achieve their financial goals.
Building healthy financial habits early in life is one of the most important steps you can take towards securing your financial future. Much like planting a seed that grows into a sturdy tree, the habits you establish in your youth will develop into a strong financial foundation that supports you throughout the rest of your life. In an increasingly complex financial world, developing these habits can mean the difference between financial stability and constant struggle. As your trusted financial partner, we’re here to provide helpful tips to start building healthy financial habits as soon as possible.
Open a Bank Account
The first step in building healthy financial habits is to open a bank account. Having a bank account allows you to effectively manage your cash flow and monitor your spending to make the most out of the money you earn. We are proud to offer several account options for our youth and young adult members to help you start taking control of your finances early.
Checking Accounts: Checking accounts are useful for managing day-to-day expenses and learning how to use your debit card responsibly.
Savings Accounts: Savings accounts encourage you to put money away for future wants and needs as well as provide a safe place to keep your money.
Learn the Basics of Budgeting
Budgeting is the cornerstone of financial health. Knowing where your money goes helps you control your spending and save for the future. Whether you’re earning a weekly allowance or receiving income from a first-time job, learning to properly budget your finances now increases the likeliness that you will reach future financial goals.
Calculate Your Income: Before you can build an effective budget, you’ll need to calculate your net income – that is, your take-home pay. This is the amount of money you earn after taxes and other deductions are made. Knowing how much you bring home helps you know how much you have to spend on bills and other expenses.
Create a Budget: Now that you know your net income, it’s time to start building your budget. There are many methods you can use to build out a monthly budget, but one common way is using the 50/30/20 rule. With this budgeting method, 50% of your income is reserved for needs such as rent, your car payment or utilities. 30% of your income is designated to wants like streaming services, shopping or dining out. The last 20% is put towards savings or debt. Build a budget that best fits your needs and stick to it so you can be one step closer to your future financial goals.
Review Regularly: Your income and bills may change over time, so it’s important to regularly review your budget and make adjustments as needed. Regularly reviewing your budget will also help keep you accountable and ensure you’re sticking to it.
Even if you aren’t earning an income yet, learning the basics of budgeting early can set you up for financial success later.
Secure Your Future through Investing
While the concept of investing can seem complex, learning the basics now will allow you to make sound financial decisions in the future, ultimately putting you closer to financial independence and security. You can start investing in your financial future early by opening an Individual Retirement Account (IRA). We are proud to offer several IRA options to help get our members started:
Traditional IRA: With this type of IRA, contributions are typically tax-deductible. This means you do not pay taxes on IRA earnings until retirement, when withdrawals are taxed as income.
Roth IRA: Contributions made to your Roth IRA are made with after-tax funds and are not tax-deductible, however, your IRA earnings and withdrawals are tax-free.
Check out our additional resources to learn more about how to start investing and secure your financial future.
Use Credit Wisely
If you’re approaching the age where it’s time to consider opening your first credit card, it’s important to prepare yourself by understanding how to use credit wisely. If used properly, credit cards can be a useful tool for building your credit. Remember these key tips when you’re ready to open your first credit card:
Credit Isn’t Free: Many people make the mistake of thinking that credit is free money, but that couldn’t be further from the truth. With credit cards, you have to pay back whatever you spend, plus interest. Impulsive spending can get you in over your head quickly, but careful spending habits set a foundation that will benefit you for a long time.
Keep Your Credit Utilization Ratio Low: Did you know that your credit utilization (the amount of credit you use compared to how much you are given) makes up 30% of your calculated credit score? That’s why it’s important to keep your credit utilization ratio low. Experts recommend keeping it to 20% or less of your total credit availability. This not only keeps you from spending more than you can afford, but also shows creditors that you are responsible with the money they lend you.
Pay On Time and In Full: To help build a good credit history with your first credit card, you need to make regular and timely credit card payments, in full if possible, or at least above the minimum payment amount. If you only pay the minimum amount due, it will take much longer to pay off your balance because it will continue accruing interest.
Take Advantage of Financial Games and Apps
Learning about finances doesn’t have to be boring. There are many games and apps that can be helpful and make understanding complicated financial concepts engaging and fun. We are proud to offer financial education modules within Digital Banking, allowing our members to earn prizes while they learn various financial topics. Complete modules to earn “pineapples” and redeem those pineapples for gift cards to your favorite stores! Take advantage of our modules and other resources to learn about managing your finances early.
Next Steps
Starting to build healthy financial habits early in life is not just about ensuring financial security; it’s about creating a pathway to achieve your dreams and goals. Ready to start your financial journey? We’re here to get you started!
Open an account online or make an appointment to visit your local branch
Earn while you learn with our financial education modules in Digital Banking
Head to our website to take advantage of our various Money Smart Programs
Read our other blog articles to help you gain the financial knowledge you need to succeed.