By Pam Reiss
Your phone is probably ringing a lot more than you would like it to, and often, you have no idea who is calling. We recently talked about how to deal with the annoying sales and marketing calls (phone spam) that we’re all being bombarded with. But, there’s another big problem that can be an even bigger nuisance: phone scams. These calls come from criminals looking to prey on unsuspecting victims to get money, information, or both. There are many different scams going on at all times and they leverage fear, compassion, or simply ignorance to get people to give them information.
Threats, prizes, special promotions are some of the more common tactics scammers use:
- Debt collection agencies demanding payment;
- Social Security Administration representatives saying there is an issue with your Social Security number;
- Lottery scams claiming you’ve won a big prize but need to provide personal information or pay the taxes on your winning;
- Arrest threats from scammers impersonating the IRS other federal entities;
- Charities looking for funding, especially after a natural disaster or other crisis;
- Tech support calls claiming you have a virus or other problem with your laptop or other device, asking you to let them log into your machine remotely.
Currently, there are also many COVID-19 scams circulating, with callers offering masks or sanitizer, testing services, work-from-home opportunities, debt consolidation, or loan repayment plans. Other scammers are claiming to be with contact tracing services and may tell you there’s an outbreak in your area.
The most important thing to understand if you answer the phone is to never give out any personal information to anyone you don’t know. That includes things as simple as confirming your name, address, email, or any other information. Every piece of information you provide, regardless of how irrelevant it may be, is likely to be added to a growing file that scammers piece together and can use or sell to other scammers. Realize that legitimate organizations aren’t going to call you and ask for sensitive information.
There are really two good options for handling calls from people you don’t know.
The first is in situations when you answer the phone and realize it’s not someone you know. Hang up immediately. That’s the easiest way to avoid giving away any information. Don’t engage callers, don’t threaten them, don’t even speak to them. Once you start talking, they realize you are not only willing to answer the phone, but will engage them, which is yet another valuable piece of information. Don’t even follow prompts to push certain buttons, and do not return single-ring calls.
If you think it may have been a legitimate call from your bank or some other organization, call them – not the number that just called you, but look up their main number – and find out if the call was real. Legitimate callers won’t mind that you are taking extra precautions.
The other solution many people have started using is to simply not answer the phone if they don’t know the number or it’s not in their phone’s contact list. Even if you think you might know the number, realize that scammers can easily spoof local numbers to make people think a friend is calling them. In most cases, friends, family, and other legitimate callers will leave a message and you can call them back. By not answering, you’re not even providing the small bit of data that you are likely to answer a call – which is valuable information to scammers.
You can also use technology to help. Your home and mobile phone providers offer tools to help identify or block unwanted calls. Check with your provider to see what options are available. Most mobile providers have free and paid versions of call filtering apps that can help protect you.
If you do receive a scam call, you should also report it to the FCC. How much information you provide is up to you, but the more information you are able to give, the more detail the FTC has to analyze complaint data and identify and react to ongoing scams and identify the individuals behind them.
Scammers count on their victims not being smart enough to figure out what’s going on before it’s too late. Understanding the tactics scammers use and the ways they try to get information from you can help your identity and your money, and help avoid having to deal with recovering funds (which may not always even be possible) and identity theft.
By Pam Reiss
As the world continues to cope with the COVID-19 pandemic, life as we know it has come to a grinding halt. Millions of us are working from home, our children are getting their schooling through videoconferencing, and our normal social and sports activities are in limbo.
Unfortunately, the situation can create some uncertainty around how to manage financially. Whether you’re currently working or not, it’s very likely you’ve been thinking about how to manage your finances during this time. The good news is at least some typical spending has naturally been cut because we’re all staying at home. But, there are many ways you may be able to keep your financial situation as stable as possible and stretch your budgets a bit.
Takeout vs. cooking – Ordering takeout or delivery is a great way to support local businesses during the crisis, but if you need to cut your spending, since you’re at home anyway, try limiting how often you order out. Instead, enjoy more home-cooked meals. There are many resources online for inexpensive, healthy meals. You can plan your entire week’s meals, make a complete shopping list, and make just one trip to the grocery store. You can even have one night of the week reserved for leftovers. If you want to continue to support a few local restaurants, set aside one or two days of the week for that.
Buy what you need – We’re still able to go to the grocery store, despite having to follow public safety guidelines. If you initially stocked up on non-perishables or frozen items, start using those instead of constantly buying more. Also, when you’re at the grocery store, there are still many items on sale each week. You can check out your grocery store’s flyer online to see what’s on sale, and plan your meals for the week accordingly.
Other ways to save – Take a look at some of the other things you’re spending on each week and see where you can cut a little out of your budget. Things to look at include video services. If you’re a cable subscriber, you might think about switching to a lower service tier, at least temporarily, or if you have multiple streaming services, consider cutting one of more of them. The monthly savings can add up quickly, and you can certainly find other ways to entertain your family.
Low interest rates – With interest rates dropping, this may be a good time to look into refinancing your mortgage or student loan, or even consolidating multiple loans. While there will be paperwork involved, lower interest rates can provide significant savings each month.
Emergency fund – If you’ve been following good financial habits and have built up an emergency fund, don’t automatically fall back on it. First take a look at ways you can reasonably adjust your spending. Then, if you find you need to dip into it, you can hopefully use just a little of it. If you’re fortunate enough to be working, this is a good time to add to or start your emergency fund. Since at least some of your normal extracurricular spending has been put on hold, consider putting that toward your emergency fund. You never know when you’ll need it.
Investment funds – It can be difficult watching retirement accounts and other investments lose money with the current market instability. The good news is they have historically bounced back reasonably quickly. Before you move or sell your investments, talk to your financial advisor, who can give you advice on whether it’s a smart move or not. Making a rash decision could actually end up hurting your investment funds.
Protect your credit – If at all possible, continue to pay your bills on time. If you’ve been using your credit cards, at the very least, pay the minimum on those to avoid hurting your credit score. If you are in a situation where you can’t pay some of your bills, contact your lenders. some lenders are allowing extra flexibility with payment terms or interest rates to help during the pandemic. You should also check your credit reports regularly. Fraudulent activity often increases during crises, and consumers and businesses are under a constant barrage from cyber criminals. Be extra cautious with emails, websites, and phone calls. There are thousands of malicious COVID-19 websites out there, and many phishing emails and phone calls looking to exploit uncertainty and fear.
The good news is most of the financial resources you normally have at your disposal are still available, though not in an in-person capacity. But, you can still contact us if you need advice. Even though we’re all dealing with this pandemic, you can do things to help keep your finances in order and limit any long-term impact.
by Paul Mulligan, SVP, Retail Lending
When you apply for a loan, lenders have access to a variety of information they use to decide whether to give you a loan and at what terms. The most popular of those resources is your FICO score, a three-digit rating based on information in your credit reports, which helps lenders decide how likely to repay a loan, how much you can borrow, the length of you loan repayment period, and your interest rate.
While FICO scores give lenders a quick and consistent way to determine borrower worthiness, they also make sure you, the borrower, get a fair credit assessment and access to the funds you need. FICO has become the de facto industry standard for lenders.
This month, FICO has updated its scoring system for the first time since 2014, which could impact your scores. The new scoring places more emphasis on trend data in your credit report, looking at your credit utilization and payments over the past two years, as opposed to only current balances. For instance, new data might include whether you tend to pay off balances quickly, carry extended debt, or consolidate loans, as well as your credit management predictability.
The other major change reflects changes in credit reports. Tax liens, insurance-paid medical collections, and judgments are no longer part of credit reports, and healthcare defaults won’t appear on credit reports for at least six months.
At the end of the day, though, the real question is, how will the new scoring impact you?
The new scores will be less forgiving of risky credit behavior. That means, if you regularly run up your credit, don’t pay off balances consistently, carry too many credit cards, or consolidate debt into personal loans in order to free up your credit cards, you may see your score go down.
On the other hand, some spending habits that may have previously been viewed negatively may no longer hurt you. For instance, if you run up seasonal balances – such as during the holidays or summer vacations – and then pay them off, your score may not be negatively impacted because those are predictable one-time spikes, not regular habits.
Ultimately, what you need to keep in mind is the basics of good credit haven’t changed. Payment history (35%) and credit usage (30%) are still the two biggest components of your FICO score. If you follow good credit practices – pay your bills on time, keep balances below your credit limits, and don’t apply for too many new lines of credit (or too often) – you should have nothing to worry about. In fact, if you manage your credit well, the new scoring could actually improve your score.
If you’re concerned about your credit rating and want to work to improve your score, the sooner you start following good financial habits and budgeting, the faster you can see positive change. Of course, it’s not always easy, so if you need help or want advice on how to become more responsible with your spending, talk to our specialists. They can provide information on financial best practices, budgeting and saving tips, and improving your credit. On the other hand, if you have managed your credit responsibly, you probably don’t have anything to worry about. Just continue to follow smart banking habits.
By Lynda Mason,
Group Manager, Post Road East Office; Woodmont Office
Now that we’ve started a new year – a new decade, in fact – many of you may have made New Year’s Resolutions to be more financially responsible, to spend a little less and save a little more. It’s a great approach to your finances, and it’s never a bad idea to take a close look at how you’re spending your income. But, if you didn’t make a resolution, that’s OK – only 8% of resolutions are kept, and 80% fail within the first month.
So, if you did set one and want to make sure you are able to keep it, or if you simply want to take a fresh approach to your personal finances this year, there’s no time like the present. The key is having specific, attainable goals and a strategy for success that is both challenging and feasible. With that in mind, here are a few tips that will help you adjust your strategy for saving this year – and keep your New Year’s personal finance resolution if you made one.
Define your goals
The first step when you’re looking to make financial changes is to know what you’re hoping to achieve. It’s hard to evaluate how well you’re doing if you simply say, “I am going to be more responsible with spending.” There are many reasons to reduce spending and increase savings – you need to identify your objectives in order to project how much you need to reduce your spending. A few examples include:
- Pay off credit card debt or mortgages
- Build retirement savings
- Start a college fund
- Save for down payment on a home or car
- Start a rainy day/emergency fund
- Plan for other major expenses (remodel, wedding, etc.)
Knowing what you are saving for provides motivation for sticking to your budget. Once you have decided what your goals are, you can set target amounts to start budgeting. You can always adjust these, but having a target in mind will help you understand what is truly attainable and what is likely to cause you to fail. In addition, if you are saving for known upcoming expenses, you can figure out exactly how much you need to save to reach the required amount by your deadline.
Understand your spending
The only way to evaluate how well – or poorly – you are handling your finances is to understand how you’re spending your income, what you’re spending it on, and how much you are saving. Track all your spending for a month to understand exactly where you paycheck is going – and if you are spending more than you earn.
Set a budget
Once you know how you have been spending your money, you can define a budget based on your spending habits and savings targets. At a bare minimum, you should know your fixed expenses (mortgage or rent, car payment, utility bill, cell phone, etc.), along with how much you want to put towards your new goals. This will allow you to define how much discretionary spending power you have for eating out, going to movies, etc. Remember, you can always be flexible within your monthly budgets. For instance, if you want to see two new movies, but have only allocated for one, you might look to spend less on dinners out for balance.
Eliminate bad habits
Take a look at your monthly activity and identify the things you do that could be costing you more than necessary. Are you paying full price for clothing? Are you eating out several times a week? Are you buying expensive Pay-per-View events every month? Are often late with your bill payments? There are many poor financial habits that could be costing you more than you realize. Take a look at these and look for ways to eliminate or at least reduce them.
Elevate good habits
There are many ways to reduce spending simply by using the tools available to you – most of them on your mobile devices, which you take everywhere. Loyalty programs offer member savings and allow you to collect points towards various purchases. Find retailers you like and try to stick with them. Don’t underestimate the power of coupons and sales – there’s no reason to spend more on something than you need to. This may also mean learning to be flexible with what you buy and when. One of the many Online Services the Milford Bank provides is the ability to create bill reminders to allow you to set preferences for receiving e-mail notifications reminding you that your bill has arrived and/or your bill needs to be paid. This tool enables you to control the entire bill payment life cycle. The Bank has also recently partnered up with Plinqit, a simple savings tool that allows you to set up and customize your savings goal and have Plinqit help you set aside a small amount of money regularly, on a schedule you choose. You can also earn money with Plinqit by watching videos and reading educational articles to learn more about money and saving.
There’s no simple answer for saving money. It all comes down to what your priorities are. As you evaluate your own priorities, if you need advice on how to save or where to put the money you’re saving, consult your bank’s financial advisors, who can help determine the best kids of accounts for your specific needs. Then, it’s all up to you.
By Lynn Viesti Berube
One of the unique features about today’s app-centric society is there’s an app or just about everything, it seems. It’s great to be able to download apps and take care of so many things on your mobile devices. On the other hand, because these apps tend to be fairly targeted – most try to solve a single problem – they don’t always offer quite the level of flexibility or functionality users might want.
Take mobile payment apps, for instance, like Zelle or Venmo, which are becoming increasingly popular. They are designed to make exchanging funds between individuals easier using digital technology. But, they are not necessarily intended for all transactions. Both companies have been clear that their intended use is for payments between friends or other people who know and trust one another. For things like paying a share of a dinner bill, sending an entry fee for a fantasy sports league, or getting in on a group birthday gift, apps like these make transactions fast and simple. These are cases where one individual outlays funds for an activity, and others need to pay their share.
But, as with any digital transactions, there are risks that users should be aware of. Here are a few simple tips to keep your apps, accounts, and money safe while letting you enjoy the convenience of P2P payment apps.
Intended uses – Use the apps as they are intended. If an online retailer asks you to pay using a p2P app, you should be suspicious. Reputable online retailers should offer payment methods that don’t require immediate P2P transfers, such as credit cards, PayPal, and other means. If you’re paying for services, such as a snowplow service in the winter, using a P2P app, you may be using local residents not set up to receive credit card payments, and sending a check each time it snows can be a nuisance, so a P2P app might be the best option. At the very least, make sure you know who you’re paying, use only reputable providers, and make sure you’ve received the service before paying. Consider sending a check the first few times to make sure the relationship works out.
Identity – It’s easy to make a mistake when typing an email, phone, number or username. Double check whatever identifier you’re using to send money to someone. Once the money has been sent, it’s hard – often impossible – to get it back, so taking the extra time to get it right can reduce potential headaches.
Send a test – If you’re not certain you are sending to the right person, send a small amount as a test and confirm they received it before sending the full amount.
Security – Follow the same security principles as you would for any other application or website. Use the highest level of security they offer, including using a PIN or fingerprint ID for transactions. If the application offers two-factor authentication, be sure to use it. While this adds an additional step when using the app, it also adds an additional layer of protection that help keep you account secure, even if your credentials are compromised.
Deposits – Some apps place funds you’ve received into a mobile wallet until you manually transfer them into your bank account. This can sometimes take several days to process, so once you have approved the transfer, check to verify that it actually went through.
Fees – Some P2P payment platforms charge fees for certain kinds of transactions. Make sure you know what your app’s policies and fees are so you won’t be surprised and can account for fees when sending or receiving money.
Settings – Always check your app’s privacy and sharing settings. They may have default settings that make information available to others that want kept private.
Kids – Many parents want to give their children access to P2P payment apps to make it easier for them to participate in various activities. You probably don’t want to give them full access to your credit card or bank accounts, so take the trip to your local bank to see what options they might be able to offer, such as a prepaid debit card to link to your child’s app. If they are part of one of the payment platform networks, they likely are well versed on the best ways to let your kids use them. Of course, before anything, make sure your child’s device has security protocols enabled, and talk to them about potential security risks and how to avoid them.
By Celeste Lohrenz
As it has been with nearly every industry, digital technology is changing the way people bank. Online tools and mobile apps are making it easier for people to manage their finances, giving them modern options to replace traditional options. P2P (Peer To Peer) payment apps, for instance, have become highly popular as a means of exchanging funds between individuals.
While check payments are still very popular – even with Millennials, new P2P payment users are nearly evenly split between those younger than and older than 45.
It’s really about having options. If there one thing a digital economy has proven it is that people want convenience. They want to be able to transact using whatever methods are most convenient for them at the time. That may mean going to a local bank office to understand the differences between home equity loans and HELOCs. It may mean putting a check in the mail for a monthly car payment. It may mean going to an ATM to take out cash for dinner. It may mean putting a new TV on a store credit account because of a no-interest offer. Increasingly, though, it also means using P2P apps to settle with friends, relatives, colleagues, or others.
For instance, Zelle – a mobile payment platform whose parent company is actually owned by seven major banks – delivered $49 billion through 196 million transactions in Q3 2019 alone, a year-over-year increase of 58% in transaction value and 73% in transaction volume. The Milford Bank is happy to now offer Zelle to our customers as a further option to your banking experience.
There are many reasons P2P payment apps such as Zelle are growing, but convenience is at the top of the list. Zelle offers a simple alternative to get money to other users quickly – if both parties are signed up with Zelle for instance, funds may be available within minutes. Zelle is available on both Android and iOS platforms, making it easy to transfer money to split a dinner tab or utility bill, regardless of what mobile devices your friends use.
But, perhaps the biggest benefit Zelle offers is trust. The biggest reason consumers avoid mobile payment apps is lack of trust. In addition to being operated by a consortium of the biggest banks in the country, Zelle partners with other financial institutions so those banks can make Zelle transactions available through their own mobile apps and online resources – as opposed to having to use a third-party app. Sending or requesting money is as simple as logging into The Milford Bank’s mobile app or online account and choosing the person to send funds to using your mobile contact list or entering their phone number or email address.
Along with The Milford Bank, more than 600 financial institutions have signed up to be part of the Zelle Network, with more than 250 already online and processing transactions. In all, more users representing more than 5,500 banks have successfully completed Zelle transactions.
By Dave Wall
Every time Apple, Samsung, or any other electronic device manufacturer releases new products, the media tends to grab hold and saturate news feeds with the incredible advances these new product bring for consumer and business users. They’re not wrong of course – think about all the things we’re now able to do from smartphone in our hands. It’s an unprecedented level of convenience, efficiency, and productivity, and the hype helps generate sales momentum as these new products become available.
But, what is left out is what to do with your old devices when you replace them. Of course, some phones are recycled when they are exchanged for new ones at mobile carriers like Verizon and AT&T. But when you consider the third-party market for not only phones, but other devices like tablets, laptops, smart watches, and the many other products that permeate today’s digital lifestyles, it’s clear that there’s an awful lot of electronic waste being created.
The United States alone generated almost 12 million tons of e-waste in 2014 according to the EPA. The UN reported that 44.7 million tons of e-waste was generated globally in 2016, and the World Economic Forum reported that number had risen for 485 million tons in 2018. That makes it the fastest-growing waste stream in the world. Yet, only about 20% was recycled. So, where do the rest of these items end up? Certainly, many are likely collecting dust in homes and offices, but a large percentage ends up in landfills or incinerators, both of which are harmful to the environment.
E-recycling offers an effective way to get rid of old electronics safely, but how should you recycle your electronics? There are many local retailers that will recycle e-waste – some of them regardless of where they were purchased. And of course, mobile carriers often offer rebates for trade-in that can be applied towards the purchase of a new device.
If you keep an eye on your community events, you will also likely find e-recycling opportunities. The Milford Bank, for instance, will be holding two Shred & Recycle Days this year, making it easy for residents to get rid of their old electronics, as well as paper documents.
The first TMB Shred & Recycle Day will take place on Saturday, May 4, 2019, from 10:00am-1:00pm at the Post Road West branch (295 Boston Post Road, Milford, CT), and will include free e-recycling for anyone and free document shredding for customers (non-customers may still take advantage of the shredding service for a $5 donation to a local non-profit).
The second Shred & Recycle day will take place in the fall, after families have purchased new laptops and tablets for the new school year, on Saturday, October 12, 2019 (10am-12pm).
Recycling electronics and paper provides a constant stream of resources that have countless uses, helps reduce the amount of junk that piles up in landfills across the globe, and reduces the environmental impact of dumping. There are many materials that can be harvested from old electronics that can be re-used to manufacture new ones, including, gold, silver, palladium, and copper. The WEF values the value of materials that can be recovered through e-recycling at more than $62 billion. Apple says it was able to collect more than a ton of gold from recycled devices in 2015. That’s worth more than $40 million.
Take a look around your home. If you have old electronics lying around that haven’t been used for years – and most households do – take advantage of this community service provided by The Milford Bank to do some good for the environment and get rid of some old junk from your home in the process.
By Tyler Haskell
Identity theft and identity fraud are becoming all too common today, with the economic impact to banks, businesses, and customers reaching well into the billions annually. In 2018, roughly 14.4 million American adults were victims of identity fraud, with losses totaling $14.7 billion. The two terms – identity theft and identity fraud – are closely related, but aren’t the same, despite often being used interchangeably.
Identity theft takes place when criminals acquire personal data, which is then used for subsequent illegal activities, including identity fraud and the sale of information to others. This information can include any number of PII (Personally Identifiable Information) data, such as social security numbers, credit card numbers, bank accounts, driver’s license numbers, passwords, and more.
There are many ways criminals can steal personal data, from advanced hacking techniques to intricate scams to burglary and dumpster searches. Corporate hacking instances have increased over the past years, with many high-profile breaches being featured in mainstream news, from retail stores to healthcare organizations. The breaches have resulted in millions of customers’ data being stolen. Mobile devices are also a high-value target, simply because of the incredible amount of data stored on them.
Identity Fraud happens when criminals use stolen personal data for illegitimate transactions. These may include fraudulent purchases, opening new bank accounts or credit cards, initiating loans, and more.
Identity fraud impacts not only the victims of identity theft, but also the other organizations that become part of the fraudulent activity: merchants, banks, credit card companies, etc. The truth is, everyone is impacted in some way because businesses build the cost of fraud into their pricing structures to help cover their losses.
Recovering from identity fraud is a daunting task that can take 200-300 hours of time and cost $1,000 or more. What’s more, these accounts can appear on credit reports for extended periods, making it difficult for victims to get legitimate credit.
First and foremost, protect your data. Don’t share passwords or account information. Don’t lend your credit cards or IDs to others. Make sure you have high levels of security on your mobile devices and use highly secure passwords on your online accounts – and don’t reuse passwords. Also use two-factor authentication whenever possible.
Be aware of the countless scams being conducted via phone and online. If you even remotely question a request for information or an offer, hang up and call the institution back yourself to verify the request. Legitimate organizations don’t usually ask for sensitive information without you having contacted them first.
Be sure to check your credit report regularly. We can assist our account holders with this by activating Credit Sense on your online and mobile banking app. Credit Sense is a tool that will help you improve your financial well-being. Credit Sense gives you up-to-date personal credit information including credit scores, credit usage, total balances, payment history, credit age and recent credit. You can refresh your credit score as often as you need and get tips on how to improve it. Credit Sense also offers credit monitoring, which gives you protection from fraud with alerts notifying you when something has changed in your credit profile.
While it’s hard to keep your data completely safe, following these simple precautions and staying alert can help you avoid the hassles and financial burden of identity theft and fraud. To help you with best practices for avoiding identity theft, contact us to learn how we are helping protect your identity and funds.
By Cortney Meng
With the end of another school, a new class of college graduates is entering the workforce. Regardless of where their career paths may take them, they share one constant – they will need to support their chosen lifestyles. It also means starting to prepare for the future, which is likely to include major expenses like home and automobile purchases, raising families of their own, funding children’s college educations and weddings, and even planning for retirement. It’s never too early to start planning for the future – even those students who are still in school.
With the pressures of school, and then finding a job upon graduating, it’s easy to ignore the need for financial responsibility – especially when parents have been footing the bill. Making the transition to the workforce even more challenging for some 44 million Americans is the need to repay student loans. In fact, the Financial Literacy and Education Commission – which including the Treasury Department and Department of Education – recently release a report stating that the current $1.5 trillion student-loan debt is a clear indication that students need better financial education as they head into the workforce.
Indeed, some schools are already teaching basic financial skills within their curricula, but there are a number of basic tips for recent graduates, and all younger members of the workforce, that can help ensure they are setting out on the right path towards financial stability.
Start saving today
Too many young adults enter the workforce with nearly nothing saved, creating challenges when it comes to living on their own and funding necessary expenses – like rent, food, cell phone bills, Internet services, and more. Having nothing saved also makes it harder to accommodate larger expenses that are certain to arise. Not having anything in savings also makes it very easy to build up high credit card debt, which can end up costing hundreds or even thousands of dollars each year in interest and negatively impact credit ratings.
Keep track of spending
This is something that really applies to everyone, but younger earners may not be aware of how important it is to be able to account for spending and how that knowledge can impact their ability to save. For a tech savvy generation, there are many apps available to help track spending. Some are standalone apps, while others can be linked to bank accounts for even more precise accounting. The bottom line is that, in order to save, you first have to know how you’re spending your income, and how much of it is necessary spending and how much is discretionary that you might be able to reduce. Once you know that, you’ll be able to start adding to your savings.
Pay bills on time
If you’ve never had to handle your own bills, it can be a daunting task at first. But, it’s important that you keep up with your bills. By paying them on time, you are able to better understand your monthly spending habits and your financial stability. Setting up automatic payments is an easy way to make sure your regular recurring bills are always paid on time. But, it also means you have to be diligent about tracking your expenses and making sure you aren’t overspending. Also make sure you balance your checkbook every month. It’s easy to fall behind on payments, but once it happens, it’s even harder to get back on track, and you also have to deal with late fees and interest, which reduce your ability to save.
For some 44 million Americans, graduation also means the start of a six-month grace period before they have to start paying back student loans. Averaging almost $30,000 per graduate, student debt has become the second largest source of consumer debt, behind only mortgages. The key is simple: start paying off your student load(s) as soon as possible. You may need to use the grace period to add a little to your savings, but be sure to factor loan payments into your monthly budget. If you’re able to pay more than the minimum payment each month, you may not be able to save quite as much immediately, but you’ll be able to eliminate that debt faster. Remember, student loans don’t disappear and will damage your credit rating if you are regularly late or default on your loan(s). If you have multiple student loans and are only able to make bigger payments towards one, make sure you pay off the higher interest loan first.
Build your credit
Staying current with bills, reducing and paying off loans helps increase your credit worthiness and makes it easier to get lower interest rate loans in the future. While credit cards are useful, limit how many you have – it will help you manage spending better and avoid getting into more debt. However, there are ways to use multiple credit cards to your advantage, such as using low or zero-percent balance transfer offers to pay off higher interest rate debt (including student loans) – just make sure you are able to pay off the amount of the transfer within the introductory period without impacting your ability to pay other bills. Also look for credit card offers with the best benefits. Many issuers today offer points or cash back on purchases, airline miles, or other benefits. Look for benefits that make most sense for you, and try to find ones without annual fees.
Rainy day fund
It’s always good to have an emergency fund. After all, you never know what necessary expenses might arise, or what non-essential spending you may want to be able to afford, including vacations. You also want to be prepared in case you are suddenly out of a job so you are able to continue paying your bills and won’t risk impacting your credit rating. A good target is to have 6-12 months of expenses saved up.
Monitor your credit
Considering the growth of cyber crime and the rate at which consumers’ personal, financial, and other information is stolen, it’s a good idea to regularly monitor your credit report. The Milford Bank offers CreditSense, a financial tool that will help you improve your financial well-being. The FTC also has mandated that everyone is entitled to one free copy of their credit report every 12 months from each of the three nationwide credit reporting agencies. Using just this as a resource, you can check your credit report every four months at no cost.
Maximize your 401k investments
It’s never too soon to start saving for retirement. If your employer offers a 401k plan with an employer match, it’s smart to contribute at least much as the maximum match, if possible. That way, you are not only putting your own money towards your retirement, but are taking full advantage of your employer’s matching contributions. If your budget allows you to contribute even more, that’s never a bad option. You can always adjust your contributions if circumstances change.
Create a reasonable budget
The key to successful financial management is creating a sustainable budget that makes sense for your needs. Take a look at your spending – including what are necessary expenses (rent, loans, utilities, etc.) and what you may be able to cut back on (such as eating out vs. cooking at home) – and create a budget that will allow you to accomplish your goals. You may have to take a hard look at your discretionary spending in order to fit some expenses into your budget initially, such as student loans. But, as you pay off existing debt and your income increases with work experience, you’ll be able to adjust your budget and save more. Don’t set a budget that won’t work for you – and certainly not one that will increase your debt.
Don’t let a lack of information or inexperience put you on the wrong track financially. If you aren’t sure how to effectively manage your finances or are looking for advice on creating a financial strategy that will help you achieve your short-term objectives while moving towards longer-term goals, contact a financial advisor. They have extensive expertise in helping recent grads – and anyone looking for financial advice – cope with the inevitable challenges of entering the professional life.