Senate Cents: A Financial Wellness Blog

Entering adulthood is an exciting time filled with new opportunities—and some new responsibilities. Financial stress can weigh heavily, especially for young adults just starting out. In fact, an Ellucian study found that 59% of college students have considered dropping out due to financial pressures, with 80% reporting that financial stress negatively impacts their mental health.^* With many having to choose between basic needs and college expenses, building a strong financial foundation has never been more essential.

Here’s how to start building those solid habits that will set you up for success:

1. Take Advantage of Compound Interest

One of the best financial moves you can make is to start saving early. Even small, consistent deposits into a high-yield savings account can grow over time due to compound interest, which allows your money to earn interest on both the initial amount and on the accumulated interest.

Imagine you start by saving $100 a month in an account that earns a 7% annual interest rate, compounded monthly. After 30 years, your total contributions would be $36,000. However, thanks to compound interest, your account would have grown to around $122,808.75!

Actionable Steps:

• Start small, start now: If you can only contribute $10 per month, begin there. Increase it over time as your income grows.
• Calculate your savings potential: Use a free online compound interest calculator to set goals and see how your savings can grow over the years.
• Consider automating your savings: Set up automatic monthly deposits into a high-yield savings account to keep you on track without the temptation to spend.

2. Pay Yourself First

Automating deposits into a high-yield savings account each payday is a straightforward way to start saving. Aim to allocate at least 20% of your paycheck to savings—it’s a habit that can help build an emergency fund, establish discipline, and grow wealth over time.

Actionable Steps:

• Open a high-yield savings account: Look for an account that offers a competitive interest rate to maximize growth.
• Set a consistent amount: Whether it’s 10% or 20% of each paycheck, make a habit of saving regularly.
• Define your emergency fund goal: Most experts recommend saving three to six months’ worth of expenses but starting with a goal of $500 or $1,000 can be an excellent first milestone.

3. Create a Budget That Works for You

A budget doesn’t have to be restrictive; it’s a plan that helps direct your money toward your goals. Whether you choose a zero-based budget or another system, budgeting ensures every dollar has a job.

Actionable Steps:

• Set up a budgeting plan that fits your needs: Start by listing your income and essential expenses, then allocate any remaining funds toward savings and discretionary spending. Consider using a budgeting worksheet to map out each category.
• Plan for ‘fun money’: Give yourself a small allowance for discretionary spending so you can enjoy life while staying on track.
• Adjust monthly: Life changes, and so should your budget. Reevaluate your budget each month to stay aligned with your goals.

4. Avoid Impulse Spending

Impulse buying can derail your financial goals. Before purchasing non-essential items, try waiting 24 hours to see if the urge to buy is still there.

Actionable Steps:

• Make a shopping list: When you go shopping—especially online—stick to a list to avoid unplanned purchases.
• Set an allowance for impulse buys: Decide how much you’re willing to spend on spontaneous purchases each month and track it.
• Unsubscribe from marketing emails (not ours!): Reducing exposure to sales and promotions can help curb impulse buying.

5. Build Your Credit Wisely

Building credit can set you up for better financial opportunities down the line. If you’re new to credit, consider starting with a secured credit card and making regular payments.

Actionable Steps:

• Get a credit card for essentials only: Use a low-rate credit card for small, manageable purchases like groceries or a streaming subscription and pay it off in full each month.
• Monitor your credit score: Use a free credit monitoring service to keep tabs on your score and spot any suspicious activity.
• Aim for 30% or lower credit utilization: Keeping your balances low (under 30% of your credit limit) can positively impact your score.

6. Plan to Pay Down Debt

Managing debt—especially student loans—early on can help avoid future financial roadblocks. Try focusing on high-interest debts first, making larger payments toward those while paying the minimum on others.

Actionable Steps:

• Choose a debt payoff method: Try the avalanche method (paying high-interest debts first) or the snowball method (paying the smallest debts first).
• Set up auto-payments: To avoid late fees and reduce stress, set up automatic payments for your minimum amounts and add extra payments whenever possible.
• Look for student loan repayment options: Federal student loans often have income-driven repayment plans that can lower monthly payments. Our College Counselor can provide personal, one-on-one consultation for all of your financial aid, repayment, and refinancing questions.

7. Take Advantage of USSFCU Financial Literacy Resources

Learning key financial principles, such as budgeting, debt management, and investing, can empower you to make smart decisions for your future. USSFCU offers a variety of resources designed to support you at every stage of your financial journey, including our popular Wednesday Webinar Series, which covers essential topics like credit building, financial planning, and managing debt.

Actionable Steps:

• Attend our Wednesday Webinars: Join us every Wednesday to dive into key financial topics with expert-led sessions that are free for all members. These webinars are a convenient way to deepen your financial knowledge and ask questions in real time.
• Explore USSFCU’s Best Life Learning Center: From budgeting guides to retirement planning tips, the Best Life Learning Center on our website provides a range of resources to support your financial literacy and planning goals.
• Connect with our financial advisor: USSFCU members have access to one-on-one consultations with our financial advisor, Michael Schimmel, to help plan and achieve their financial goals.

By taking advantage of USSFCU’s tailored resources, you can gain the financial confidence you need to thrive!

8. Use Tools to Stay Organized

A well-organized approach can keep you on track with your financial goals and prevent unnecessary stress.

Actionable Steps:

• Track your spending: Use budgeting apps to categorize and keep track of expenses. Apps like Goodbudget or EveryDollar make it easy to see where your money goes.
• Try our Budgeting Worksheet: Download this free budgeting worksheet to get a clear picture of your income, expenses, and savings goals. This worksheet helps you visualize your spending and stay focused on what matters most.
• Set financial reminders: Set up calendar alerts for bills and account reviews to ensure everything stays on schedule.
• Create a “future goals” fund: If there’s a large purchase or investment you’d like to make in the future, start a dedicated savings account just for that.

Start Small, Stay Consistent

By starting early with budgeting, building credit, and saving, you can build a solid foundation for your financial future. Take these proactive steps now and watch as your financial stability grows over time.

^*Ellucian Study. This article is for informational purposes only. We do not endorse any third-party websites or services mentioned in the content.