Erica Salmon is a senior vice president for consumer banking for Bank of America Corp. in Rhode Island, where she has worked since 2002. She is also a mother to a recent college graduate, and recently wrote a column on how to raise fiscally responsible young adults.
PBN: How important is it for young people to improve their money habits, and does a major interruption in their life such as the coronavirus make it more difficult?
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SALMON: Life looks very different this fall – whether you’re a student returning to school or a recent graduate stepping into a new job. One way to help prepare young adults for whatever lies ahead is by teaching them basic financial skills during these transitional years.
Whether your children are preparing to go back to school or are staying home longer than anticipated, take advantage of this time to help them develop sound financial habits and prepare for the uncertainties ahead.
PBN: As a mother, how has your family handled some of the uncertainties caused by the pandemic?
SALMON: I’m seeing firsthand the difficulties of planning for such an uncertain future. My daughter graduated in May 2020 from college, and like all other 2020 college or high school graduates, she didn’t have the graduation her older sister experienced nor the large celebration with friends and family that she was looking forward to.
It has been a priority for me to ensure that she still felt accomplished and celebrated during this important milestone, while keeping her focused on the bright future she has, regardless of the current environment.
PBN: What is the No. 1 thing that young people can do to improve their financial situation?
SALMON: Start saving and create an emergency fund. An emergency fund can provide peace of mind and act as a buffer for unexpected expenses.
One of the benefits of tracking your spending is that it will help you find money to save – even if it’s just $20 a month from old recurring subscriptions that you can cancel, the important thing is to start building your savings muscle.
At Bank of America, we have an account geared specifically for young adults called the Advantage SafeBalance checking account, which allows students to bank without the worry of overdraft or nonsufficient fund fees.
PBN: How can a young person build a good credit score?
SALMON: When used responsibly, credit cards are a great way to manage expenses and build good credit, which can come in handy when signing a lease, for example.
To use a credit card wisely, plan out purchases in advance, keep a close eye on your expenses to avoid overspending and strive to pay on time and in full. When possible, choose a credit card with rewards that match your existing spending habits.
PBN: Most young people are not accustomed to living within a budget. What should they think about as they create a budget for the first time?
SALMON: Get in the habit of tracking expenses. That will help you identify excess spending and find areas to save. Put together a budget that tracks your expenses and update it regularly as your spending habits shift. As we’ve seen this year, financial situations can change rapidly, so the spending plan should reflect any changes to your lifestyle.
Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.
