• Start establishing credit early; ideally by age 18. You can establish credit and still pay your balance off in full every month.

• Seek out professional tax and investment advice. Studies show that of people who accumulate wealth, the vast majority spend money on professionals (e.g., a CPA, financial advisor, attorney, a Realtor, and a mortgage lender).

• Prepare for a mortgage payment and/or investment opportunities. If your current rent is $2,000/month but you think you can afford a $3,000 payment on a future opportunity, put that $1,000 into a separate fund so you can get a realistic sense of you budgeting capabilities.
  

• Put your pay/salary increases into savings; you won’t notice the difference. The same goes for your annual  tax refund: put it into savings.

• Max out contribution limits in your employer-offered 401(k). The employer match is free money! You can borrow against this account in certain circumstances (e.g., for a down payment on home purchase, or for health or financial emergencies). Restrictions apply.

• Be prepared. Put money in your investment and 401(k) accounts. That money grows. Life can be uncertain, as demonstrated in March 2020. Time is not on our side and procrastination is rarely a good thing in finance.

• Large car payment at high interest rates. (True for any depreciating asset). Be conservative.

• Inadequate cash-flow planning, especially if you’re self-employed or take a job at a startup company. Be sure you have enough money in the bank for your living expenses. Build a safety net (savings equal to 6-12 months of expenses). Live within your means.

• Lack of appreciation or comprehension of risk. Business plans always sound great — and success inevitable. Smart, high-earning people often underestimate the likelihood they will be involved in a business failure.

• Stock tips in “can’t miss” high-risk startup companies. View it like the slot machines in Las Vegas: gamble money you can easily afford to lose, because most likely you will.

• In a rising housing market, waiting too long to purchase a home. Procrastination is not your friend.

• Don’t avoid risks entirely. Evaluate and be smart about whether you are in a position to take that risk or not.

• A credit score used to affect a person’s insurance rates. This is no longer the case, does but  it can affect your job prospects. Some employers check credit scores as part of the pre-hiring process and background checks.

• Your interest rate on a car loan, personal loan, or your mortgage loan is affected by your credit score. 

• Credit scores affect whether a landlord or property management company will rent to you. By law in Seattle, management companies and private  landlords can state a minimum credit score to rent to you.

What determines your credit score?

• Payment history  (35%)

• Amounts owed     (30%)

• Length of history   (15%)

• New credit inquiries (10%)   

• Types of credit used (10%)   

How to establish credit and increase your credit score:

• As a student, consider using the Sallie Mae federally backed loan program (up to $5,500). You can even pay the loan off and close it out after a few payments. This helps establish your credit history.   

• Get a low balance Visa credit card, use it, and pay the balance off (on time) every month. After six months of successful/smart credit use and payments, request an increase in the allowable credit limit. 

• Consider asking relatives with excellent credit to add you as a cosigner on their credit card.

• Pay bills on time so they don’t go to collections; after a move, change your address with the USPS and forward your mail as soon as possible.

How to protect your credit score:

• Credit freezes (see Credit Resources in the next drop-down tab). Identity theft is a huge issue. Keep your passwords safe!

• Be vigilant about student loan deferrals. Verify paperwork is processed correctly. Keep records of correspondence with service providers on your student loans.

• Monitor and pay parking tickets, library fines, medical bills, etc. promptly.

• Don’t give your Social Security number to any entity that doesn’t need it (e.g., a doctor, dentist, hairdresser, etc.).

• Free Credit Reports: Consumers can review their personal credit reports weekly for free.

• Learn about FICO® scores

• Learn about VantageScore credit scores

• Correct Credit Reporting Errors: Learn how to file a dispute here or via this link.

• Avoid Unwanted Solicitations Consumers can opt-out by visiting these sites:

  https://www.optoutprescreen.com/ (for mail)

  www.donotcall.gov (for phone)

• Credit File Security: To place a fraud alert or add or remove a freeze or lock visit the three sites below. Remember to remove a credit freeze or lock before requesting new credit.

1. Equifax

2. Experian

3. Transunion

• Avoid Credit Repair Scams: Insights from the Federal Trade Commission (FTC) so you can detect red flags.

• Start early and let your investment(s) compound.
  

• Make good financial decisions and avoid common mistakes. Learn from others’ mistakes so there’s no need for you to “rinse and repeat.”  

• Assess risk before embarking on an investment or “opportunity.” 

• Credit , credit , credit -  protect it and guard it with vigilance, intelligence, and effort.

Wire Fraud and Scams

• Never click on an unsolicited link that you’re not expecting – whether you know the sender or not. 

• If the message conveys an urgent, time-sensitive offer or ask: “Limited Time Offer” — “Act Now” — “Do X by the end of today or X happens.” DO NOT engage! Delete/ignore.

• Initiate a phone call (using the trusted phone number in your records) to the person you’re working with on a transaction, or with whom you have an existing professional relationship. Discuss the requested items to verify the request is legit. 

Virtual Private Network (VPN)

• A VPN is one way among many to safeguard your identity online. See NSA/CISA guidance (both government agencies) on what to consider when you’re evaluating the best VPN service provider for you.

Keep expenses down. Live like a student for a while, even when your income increases

Save your raises and bonuses. You have lived without them, you can continue to live without them.

Stay out of debt as much as you can. There is good debt and bad debt.

Income generation: Show initiative and remain open to opportunities. Continually look for ways to increase your income. As an employee, look for chances to show your worth — and its value beyond your current salary — to your employer. Keep an eye out for moves within the company and to other employers.