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My Advice To College Grads

Here’s how to set up your Betterment account.

Articles by Nick Holeman, CFP®
By Nick Holeman, CFP® Head of Financial Planning, Betterment Published Mar. 25, 2020
Published Mar. 25, 2020
4 min read

I’ve given financial advice to hundreds of new college grads. If you’ve just graduated college and are starting your first job, here is how I generally recommend getting started with your account at Betterment.

Icons showing Cash Reserve and Auto-Deposit features

The Elephant In The Room

The average amount of student loans a 2019 graduate holds is $31,172, which equals a monthly payment of about $393. It’s very important to make your payments, and make them on time. This is good for your credit score, and it helps you to steadily pay off your loans over time.

🗹  TO DO: Set up auto-pay with your loan provider to make it even easier. Sometimes using auto-pay will even win you a small decrease in your interest rate.

Get That Bread

If your new employer offers a 401(k) match, take it. It’s common for employers to match 50% of the first 6% of your salary, although matching formulas can vary. Contribute enough to your 401(k) to get the full match, so that you can get as much of that free money as possible.

This advice isn’t just about free money—it’s also about compounding. The longer your savings and earnings compound, the more your future self could end up with down the road. The best part is that 401(k) contributions come right out of your paycheck before it hits your bank account, so you won’t even notice what’s missing.

🗹  TO DO: Look into your company’s 401(k) match and take advantage of it.

Emergency, Schmergency

The future is unpredictable, so let’s prepare for whatever it may bring by setting up an emergency fund. It’s usually a good idea to save up at least 3 to 6 months worth of expenses so that you are able to pay your bills even if something unexpected comes your way.

🗹  TO DO: Open a Cash Reserve account, which earns one of the highest interest rates you can get on your cash. Then, set up a twice-a-month auto-deposit that happens on the same days you get paid.

This is the advice I’ve given to other college grads just like you. Help set yourself up for success by setting up your finances in a way that’s going to give you a running start.

Start saving


Cash Reserve

Cash Reserve (“Cash Reserve”) is offered by Betterment LLC. Clients of Betterment LLC may participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients’ funds are deposited into one or more banks (“Program Banks“) where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.

Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC’s Form ADV Part II.

Contributing Authors

Katie Marie
Content Manager, Betterment

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