It is bad news bears when most high schoolers do not know how to manage their money. But it is a far worse state of affairs when millennials, in general, seem to feel like a fish out of water when it comes to their financial education. An unfortunate reality in the United States is that neither high schools nor colleges do enough to get their students world-ready, come graduation day. And that includes teaching them how to handle their money. What’s more, many parents — themselves bad with money — can’t do the teaching job, either. Be that as it may, it is still important for high schoolers fresh out of their senior year, and millennials who never learned, to have a bit of finance-knowledge up their sleeves. Some of this knowledge includes, but is not limited to:
Both saving and investing are important
Of course, saving is important. But it is also important to learn all about investing, and how to do so as lucratively and as safely as possible. It makes sense that so many millennials are conservative at best when it comes to the stock market. After what happened to much of the baby boomer population — aka millennials’ parents — during the Great Recession of 2008, the skepticism, even fear, is understandable.
But did you know that 42 percent of millennials invest conservatively compared to 23 percent of boomers (according to a 2018 Fidelity Investment study)? Perhaps, having just entered the workplace during the last recession, the fear is too strong with this generation. The problem is that you miss 100 percent of the shots that you do not take, as the old saying goes. In other words, there can be no return on an investment that was never made in the first place.
Lesson: Don’t hide from the stock market!
Understand student loans
And understanding means more than just understanding that it will help you out with paying for college and whatnot. You also must understand what the impact of your college loans will be. You also must understand exactly how to look ahead into the future and see what is on the horizon. Surveys show that borrowers often regret borrowing come graduation day. It is not always a bad move — sometimes it is the only move — but it is a move that is worth thinking over well before pulling the proverbial trigger on taking out a student loan.
Before borrowing, it might be worthwhile to try to make a rough estimate of how much you think you will be earning after college. Sometimes you have no clue. But it helps if you know what you are studying. That way, you can investigate how much an average salaried worker with that degree earns. Also, pay close attention to the interest rate on your loans and how that interest will accrue over time. Will it begin accruing during college or only after you graduate? Finally, what do your repayment plan options look like? Will you be graduating early?
Because student debt has been the reason for so much hardship in recent years — including putting off marriage, kids and retirement — it is important to think long and hard about student loans.
Lesson: You don’t absolutely have to avoid student loans, but if you can it is your best bet. If you cannot, at least know what you are getting into. Do research!
Respect the credit score
Don’t ignore your credit score because it might be just this number that stands in the way of you buying a home, a car or other things that you may want later on. Remember to do things like pay off your credit card balance in full each month when it is possible, as it helps to build up a nice, pretty credit score (the higher the better!).
It is important to understand that late payments on credit cards very often trigger fees and result in lowered credit scores. Be wary of your grace period on a payment and do not exceed the time that has been allotted you to pay off something.
Lesson: Credit scores are important. Don’t ignore them.
Minimum wage isn’t always bad
I mean, it sucks if you are trying to nourish yourself to a point beyond utter starvation. That is a given. But, having said that, if you can afford to be paid minimum wage, there are reasons why taking a minimum-wage job may not always be the worst thing in the world. The main reason is if it will build up your resume and credentials in a field in which you want to have a career. It is not unheard of that a $15 an hour job can lead to a $100,000 a year job in the long-run, for instance.
In addition, it isn’t all about the money when it comes to the availability of an excellent mentor, or just plain old decent role models. Even just a good manager can make up for poor pay in terms of workplace and career-education. Another thing to consider is a work-life balance. You might make great money and have to be away from family for months on end. Or you might make minimum wage but get to come home to your family every evening at a reasonable time.
Lesson: Consider more than just the pay, if you can afford to do so.
Cut out unnecessary purchases
There really is no good justification for buying that third Gucci handbag or the $300 pair of jeans, try as we might to justify those purchases to ourselves. What is important is creating a budget. Delayed gratification is an important skill to learn as you enter into adulthood. It’s not that you don’t get to buy the thing eventually, but learning to save for something will prove valuable to you in the long-run. Studies have shown that those who learn to tolerate anticipation rather than expecting instant gratification also have better stress levels, social skills and even healthier weight.
Lesson: Learn to put off unneeded splurge purchases, and start a budget.
By being born in the United States of America, the odds are against you gaining a suitable financial education through proper means. That does not imply, however, that you cannot educate yourself. Information, in this modern world, is at your fingertips. It all comes down to whether you click on the right links or not.
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