Starting Out / New Professional
Starting Out/New Professional
As you start your career, laying the right financial foundation is important during this season of life to ensure your future financial success. Every dollar you save in your 20s can be worth 10 times as much as a dollar saved in your 40s. Although it may seem far away, now is the best time to start saving toward your retirement.
During this season of life, you are probably learning to manage your spending and saving within the constraints of your income. Here are a few ideas to consider as you get started:
1. Identify your short, mid- and long-term goals and budget accordingly.
Short-term goals may include paying for a wedding, honeymoon, furniture or a new car. Mid-term goals may be purchasing a home or funding your future children’s college education, and long-term goals may include where you want to be financially when you retire. Setting goals now will help you determine how to spend and how to save your money. Use Clarity, our free Personal Financial Manager available through online banking to budget and set goals.
2. Establish an emergency fund.
A good rule of thumb to follow is to save three to six months worth of living expenses to cover rent or house payments, utilities, car payments, food, transportation and insurance into a separate savings account that you can easily access. This ensures a good cushion in case unexpected events happen, like a job loss or uninsured medical expenses.
We recommend an automatic savings tool like Kasasa Saver that will make saving simpler. The savings account automatically drafts your Kasasa checking awards plus the amount of money you pre-determine from your Farmers Bank & Trust checking account.
3. Build assets through saving at least 10% of your income.
Investing in CDs or money market funds as part of your short-term financial strategy may be wise. Then, your long-term strategy can include stock market investments, as it has historically outperformed other types of investments over comparable time periods. During this season of life early in your career, it is also wise to consider participating in the 401K or profit-sharing plan your employer offers, or open an Individual Retirement Account, also known as an IRA account.
Farmers Bank & Trust can help compound your savings with an account that fits you.
- CDs – Maximize your return by locking in a competitive rate for a chosen term.
- Personal Money Market – Earn higher interest rates, while still having the ability to access your money, at any time.
- IRA – This tax-advantaged savings option will help you build your retirement fund.
4. Open a checking account for this season of life.
Save on time, money and paper with a Farmers Bank & Trust checking account. We offer online and mobile banking that simplifies banking when you’re on-the-go. Our personal checking accounts offer NetTeller Online Banking and NetTeller Bill Pay at no additional charge.
- Kasasa Checking – Earn up to 2.01% APY interest or 5% Cash Back, ATM fees refund and unlimited check writing
- Farmers Checking – No-fee ($4 with paper statements) and no minimum balance checking with added features.
- Club Checking – Unlimited check writing with a multitude of benefits for a low monthly fee.
5. Borrow wisely.
Farmers Bank & Trust offers a balance transfer program to help you avoid high-interest credit cards and consolidate the balances into one low monthly payment with a Farmers VISA credit card. We work with you on your major lending needs including personal and vehicle loans, home mortgages and home equity lines of credit.
6. Determine if you are ready for homeownership.
In this season of life, you may be thinking about buying a home. Whether it’s to establish roots and have a place to create lasting memories or to build equity, there are many things to consider before buying a home.
First, it’s best to have little debt and have three to six months of expenses saved in addition to your down payment. Also, a house payment that is at or below 25% of your monthly salary is a good target. Here are a few tools that will help you calculate what payment range best fits your income level.
Farmers Bank & Trust offers loan options to fit your season of life. With a 15- or 20-year fixed-rate mortgage, you will quickly build equity in your home. Our lending experts can help guide you to finding the loan that meets your unique needs. Begin a mortgage application online, today!
7. Understand your credit report.
Credit reporting agencies keep track of your financial behavior including how much credit you have, how long you’ve had it and whether you pay your bills on time. The agencies that maintain the reports include Equifax, TransUnion and Experian. Lenders buy credit reports and use them as a tool in deciding whether to offer you a prequalification. Credit reports are ranked with a score between 300 and 850 that allows the lender to determine whether you are creditworthy and are likely to repay a loan.
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