June brings thoughts of summertime activities, the longest day of the year (June 21) and maybe our fathers – Father’s Day is June 16. While dads are known for telling corny jokes and supporting you in your school activities, they are often a go-to source for financial advice.
Here are a few financial advice tidbits we found in honor of Father’s Day.
- Got a raise at work? Great! Now live like you never got it.
When people receive raises, they sometimes start living like they got a much bigger raise than they actually did. For example, they may buy a larger house, purchase a more expensive car or go on an extravagant vacation. Before they know it, they’ve spent more than they actually earned and can afford. Best advice: Save the extra money toward an upcoming trip or emergency fund.
- Research before you buy.
Especially for larger, expensive items, this is good advice. For example, if you are buying a car, start with a budget including insurance, gas, repairs and maintenance. Then determine whether you want to buy new, buy used or lease a car, and choose a dealership to work with on the purchase. It is a good idea to go into the dealership knowing how much you are willing to spend on the vehicle.
- Take advantage of free money.
“Free money” can mean interest earned from savings account deposits and/or interest from certificates. It can also include contributing enough money to your company’s 401(k) plan to receive the employer match (this is the free part). To get the most out of your savings funds, place them in a high-yield savings account, which provides an above-average interest rate. Certificates have longer terms but offer higher rates than traditional savings accounts. Check with your financial institution for more information.
Once you start working, contributing to your company’s 401(k) plan is a great way to start saving for retirement. Although it may seem like a lot at first, planning to save at least enough to receive the employer match, usually 3% to 5% of your annual salary, is a smart savings strategy.
- Start building credit early.
This advice may seem hard to follow. How do you start to build credit if you can’t get approved for a loan? There are several ways you can establish a credit history, such as through secured credit cards, a credit-builder loan, a co-signed credit card or loan, or authorized user status on another person’s credit card.
Michigan State University Federal Credit Union offers many savings products to help you put dad’s advice into practice. The credit union also offers credit cards for students at the lowest interest rate to help them start building credit, as well as free FICO scores. If you are in the market for a car, qualified members can apply for an auto loan with an interest rate as low as 3.25% and receive $100 when the loan closes through June 30. Visit msufcu.org/auto100 for more information.
Make sure to thank your dad this Father’s Day for all the things he has done for you over the years. His advice might be why you pay off your credits cards every month, save for retirement and got a good deal at the car dealership