Building Credit - First Internet Bank - Building a Budget

Building the Foundation for a Healthy Financial Future

By Guest Author: Nick Mates, First IB Operations Intern on September 28, 2016

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Growing up with a mom in the financial services industry and working for a bank throughout college has helped me learn a few tips for making it a little easier to save and plan for my financial future. As part of my internship at First IB, I’ve been invited to share a few of the things I’ve learned:

Build a budget. I know, I know… Building a budget is often the first step on any financial guide. But a budget doesn’t have to be a spreadsheet with 100 complicated formulas that categorizes your finances to the penny. The key to a successful budget is being honest with yourself about what you can and can’t afford, and focusing on the “will be” and not the “could be” of your finances. Now that we’ve got that out of the way…

Build your credit early. Having good credit is the key to financial success down the road, but it doesn’t have to be hard and complex. My mom taught me (and surprisingly, the 18-year-old me actually listened!) two ways to establish solid credit before I graduate college:

  • Putting utilities in my name — When there were 10 guys living in my house my sophomore year, it was a bit of a madhouse; but I made the most of it by putting the utilities in my name and paying the bills on time. While it wasn’t unusual for a roommate to be late paying his part, which made it necessary for me to float the money for a week, having three years of on-time utility payments did wonders for my credit.
  • Getting a small loan when I didn’t really need it — My freshman year, I was rear ended and totaled my car. Insurance wrote me a check to buy a new one, but even though I had the money to buy my car outright, I still got a loan. Yes, I had to pay a little bit of interest by not paying upfront, but having a lower mortgage payment later in life because of my good credit will more than make up for that.

Use credit wisely. Credit cards can be a terrible thing, if used poorly. But contrary to what we heard growing up, credit cards can actually be a good way to build credit and provide an option for bigger purchases. Want to take a final big spring break during your senior year, but don’t have the money right now? Credit can be a good way to cover the cost…as long as you plan to pay off the entire balance on time and as quickly as possible. Whether it’s credit or cash, always be smart about your spending.

Look for less expensive alternatives. You won’t be able to afford everything you want to do or buy, and that’s okay. The key is to not get upset about something you can’t control, but to find something else that can be just as fun. Can’t afford a ski trip? Find a cool place to go camping with a group of friends instead. Thinking about going out for drinks with friends tonight? Host a poker game or Netflix night with your roommates. Being responsible isn’t about giving up everything that’s fun; it’s about being smart while still having fun.

Stop and think. What this all boils down to is stopping and thinking about how you spend. Do you really need a 50” TV or can it wait till after you graduate? Is buying that next round of drinks the smartest thing to do? Building good credit and setting yourself up for the future is all about being honest with yourself about what you can and can’t afford — and sticking to it. Plan for what will be, hope for what could be, and become even better than you imagined.

At First Internet Bank, our mission is to empower you to make smarter financial choices. Give us a call at 1-888-873-3424 if we can be of assistance.

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