You’re 30 — Stop Doing What You Did in College

by Sophia Bera on September 7, 2016

I’m a big fan of automating your finances as a way to grow your wealth. After about 30 minutes of set-up, your money is whisked into different accounts, and you’re less tempted to spend your savings because you don’t really see that money.

But every year (or whenever you experience a big life change like getting married, having a kid, getting divorced, or getting a big raise), you should reassess how you handle your finances. What made sense for you a few years ago might not match your goals and needs today.

A pattern I often see is people who have been out of school and on their own for years, but they still handle their money the way they did in college. Maybe you’re totally happy with the status quo, but I still believe you should look into changing things up to give you options and flexibility in the future.

Here are three places to upgrade your life:

Your Bank Accounts

That student checking account served you well back in college. The bank had an ATM in the student union, the fees were pretty low, and the required minimum daily balance was manageable.

But you’re an adult now, with adult quantities of money. There are bank accounts that will reward you for that by completely waiving fees and offering a higher interest rate.

Most importantly, keep your checking at a different bank than your savings account.

And you do have a savings account, too, right? If not, set one up with an online bank like Ally. Online banks often pay higher interest rates, and having that money take a few days to transfer to your checking means you’ll spend it only when you need to.

Pro tip: You can even have multiple savings accounts earmarked for different things, like emergency savings, travel, or saving for a down payment.

Don’t keep your money in the same account you had in college. Upgrading your banking is a worthwhile investment of your time. If you’re wondering how much money to keep in your checking and savings accounts, check out this post that I wrote for Business Insider.

Also, if you’re a business owner or have a side hustle, I highly recommend you keep your business accounts separate from your personal accounts. It will make tax time much easier!

Your Credit Card

That no-frills, no-fee credit card with the low interest rate and low credit limit served you well when you were first learning to use credit responsibly. If you have excellent credit and a history of paying your bills in full and on time each month, you can get a credit card that works harder for you and pays you rewards in return

First of all, you probably need a higher credit limit, which will allow you to make the occasional major purchase without maxing out your card. This can actually help your credit score! One of the factors that affects your credit is the credit utilization ratio. If you routinely charge more than 30% of your total available credit, you could be dinging your score. A higher credit limit lets you pay for big-ticket items without exceeding 30% of your credit limit.

Second, you should be earning credit card rewards. If your old card doesn’t net you rewards points or cash back, you’re not maximizing your credit card spending. Imagine if your usual purchases resulted in one or two free vacations a year!

Rewards cards often have higher interest rates, an annual fee, or both. But both of those things can be worth it if you never carry a balance and the rewards you earn far exceed the cost of the fee.

Where You Get Your Financial Advice

In college, your main source of money wisdom was likely your parents. After all, they might have still been supporting you financially at that point. You might have just been beginning to access accounts they started for you, and funded, when you were still a minor.

Many new graduates, faced with things like doing taxes and setting up retirement savings for the first time, turn to their parents.

Consider seeking financial advice from different sources. Here’s why: your parents, awesome though they may be, can’t give you unbiased advice. They love you, they worry about you, and they might not be able to see you as the adult you’ve become.

Now that you’ve been financially independent for a few years, you shouldn’t feel like you have to tell your parents about every money decision you make. And if you’re married or in a long-term partnership, your significant other should be the only other decision-maker when it comes to your money.

Keep in mind that your parents possibly got their money advice from their own financial advisor. Your parents’ financial advisor might not be a good fit for your needs, either. If they don’t frequently work with younger clients, they might focus more on services geared toward people who are closer to retirement. They might offer outdated advice that served people well 30 years ago, but doesn’t take into account new financial products or the economic realities most Millennials face.

Seek out unbiased financial advice that fits where you are in life.

If you’re ready to learn more about working with a financial planner, I can help! Fill out this application to become a client of Gen Y Planning and a member of my team will be in touch.