Sound financial know-how is one of the most important things to learn. Developing good financial habits now will pay great dividends in the future. Don’t wait until you think you “have money” to begin to learn how to manage it. Personal finance means a lot of different things to different people, but it’s usually not about being rich. Personal finance is about having the freedom to follow your passions and dreams, doing what makes you happy, and controlling your own destiny without worry or regrets about money. Here are 7 tips related to Personal Finance that everyone should learn:
Make a decision to invest in your financial education.
The number one financial mistake someone can make is to do nothing. Decide to invest some time and resources in your financial education. Begin to read about personal finance on blogs, websites, and in financial magazines and books. Because of the complexity of the subject, it is important to get a diverse range of advice! Talk to parents, friends, and peers. Find others that are also interested in discussing personal finance issues. Read financial blogs like DailyFinance.com or TheSimpleDollar.com. Subscribe to Money Magazine or check out books from your local library. Find a mentor who can share his or her financial experience with you. Be careful to not overwhelm yourself or think of your financial education as a “chore.” Simply make a decision to educate yourself.
Know the importance of having good credit.
Good credit is an important, and nearly essential, tool in today’s economy. A bad credit score can lead to: higher fees and rates on loans, being declined for accounts, no credit line increases, or being rejected for jobs, apartments, or insurance. Good credit can give you access to these things, as well as save you hundreds of thousands of dollars in interest! In fact, your credit score may be the single most important number in your financial life! The most common credit score used is called a FICO score which ranges from 350 (lowest) to 800 (highest). To get the best rates, you need a credit score of at least 720. FICO scores are calculated using a complicated formula. The graph below shows the major factors and how much they weigh in calculating your score:
Get a credit card and learn how to use it wisely.
So how do you begin to establish credit? By the (smart!) use of credit cards. For most, a credit card is enough to begin to establish a solid credit score. There is some that think you should not use credit cards at all….and there certainly are risks if you misuse or mismanage your credit spending! However, the smart use of credit cards is very helpful and sometimes necessary for building good credit. Be sure to research your credit card options by using a reputable website like Bankrate.com. Make sure you understand all the terms, rates, and fees. Sign up for a low-rate, no-fee card. Don’t go crazy! Two cards are enough – one Visa and one MasterCard. Arrange a limit that won’t tempt you to get into trouble, and set up automatic payment from your checking account each month! Keep using your card(s) a little each month and pay them off each month to build a payment history. Retail cards may be easily accessible and offer points, but they often come with higher rates and fees! If you have a joint account with your parents, be aware that your actions can hurt their credit and vice-a-versa! Despite the need for establishing good credit, don’t let a credit card be an excuse to spend money! Credit can easily be wrecked by overspending and take years to repair.
Optimize and automate your financial management with technology.
No one wants to spend a lot of time pouring through statements and receipts. With technology, it’s easier to manage your money today more than ever! Every college student should have a free checking account, linked to a free savings account. Use Bankrate.com to research banks and credit unions. Look for a free account for students or with direct deposit. Make sure your bank’s website is user-friendly and offers free online bill pay. Have any paychecks directly deposited into your account so your money is always there when it needs to be. Set up an online savings account – these accounts offer higher rates and can be linked to any checking account. Set up automatic transfers to your savings account based on specific savings goals. Pay as many bills as you can online and set up automatic payments. Watch out for “overdraft protection.” Banks offer this as a way for your check or debit card charge to clear even if you don’t have the money in your account, but the problem is that they will then charge you $30 or more per occurrence. I would rather deny overdraft protection and save the fees!
Create a conscious spending plan.
There’s a dirty “B” word in financial planning and that is Budgeting. No one wants to budget and rarely do people stick with a budget long-term. So rather than budget – choose to take control of your finances rather than let your spending take control of you. Choose how you spend your money by making a conscious spending plan. The “pay yourself first” concept says to first put money into savings and retirement (paying for your future), then pay your fixed costs (must-haves), and then pay your discretionary spending last. Too often, we fall into the bad habit of reversing that order! Take control of your spending plan by resolving to spend 1 hour per week optimizing your spending. Link your bank and credit accounts to a financial tracking program like Mint.com or Quicken.com. Both are secure and available as an app for your phone. Spend a few hours setting up your accounts and spending categories and let technology do the rest! Strive to put 10% of your take-home pay into retirement or investments, 10% into savings for a specific goal, 50-60% into your fixed monthly costs, and the rest 20-35% you can spend with no worries and no regrets!
Start saving and investing now.
The most powerful factor on your future financial situation is time. Once time is gone, there’s nothing we can do to get it back. Time coupled with a decent interest rate can make for some powerful savings! Did you know that if someone age 20 would invest $500 per month for 40 years, by the time they’re age 60, they would have invested $240,000? Even better, factoring in an interest rate of 6%, that person would have just over $1,000,000 in their account? However, if that same person waited until age 30 to start investing, their account would be just over $500,000 at age 60. That is a difference of about $500,000 that you can’t make up because those 10 years are gone!
You don’t need to be an expert stock-picker to start investing. Investing is more about setting goals and having the discipline to stick with your plan to achieve your goals. Investing is not only for rich people either. You can open an investing account with as little as $50 per month. Index funds are low risk, low-cost mutual funds that offer a nice stress-free way of investing your money. You can also ask your employer what retirement or employee investment programs they offer and begin investing immediately. Many employers offer a retirement “match” – which is like getting free money deposited into your account. Other employers offer a stock discount to their employees, even part-time employees. Talk to your HR department and do some research on investopedia.com or other fool.com to learn more about investing for your future.
Have a plan for your student loans.
Student loans are often the first significant debt incurred by college students:
- Subsidized Stafford loans – low interest loans awarded to need-based students. Government pays the interest for you as long as you are in school.
- Unsubsidized Stafford loans – low interest loans available regardless of financial need. You are responsible for the interest that accrues during the loan.
- PLUS loans – Low interest loans for parents to pay for a dependent student.
- Perkins Loans – For students with exceptional financial need, loans are repaid through the school.
- Private student loans – Offered through banks or other private lenders. Terms and rates vary.
- Consolidation loans – Allows borrowers to combine multiple federal student loans into one loan. Usually done after graduation. Can also consolidate with a spouse.
It is important for you to learn all you can about your financial aid and have a payback plan for when you leave college. Go to http://studentaid.edu.gov and http://loanconsolidation.edu.gov to learn more about your financial aid and how you will most likely need to consolidate your loans upon graduation. Meet with your financial aid office at least once per year to make sure that you are optimizing your financial aid, but also not taking more money than you need. Even if you aren’t required to make payments until after graduation, most loans start incurring interest charges as soon as you receive the funds, so if you’re taking extra money just to have for spending, it is costing you more in the long run!
Your financial future:
People often get caught up in experiencing the here and now, but most realize what they are doing now is working toward building a better future. Don’t make the mistake of inaction when it comes to your financial future. Part of that is envisioning your financial future. Consider the following:
- Where do you envision yourself getting a job or going to grad school? How much do you think it will cost?
- If you want to have a family, what does that look like? What costs are associated with that (wedding, house, raising kids, etc)?
- What role do you see travel playing in your future and how can you make that possible?
- Does your career path include charity work or work that is meaningful, but otherwise not profitable? Peace Corps? Teaching? Non-profit work? How do you plan on meeting your financial obligations?
- Each semester, calculate your projected monthly student loan repayment upon graduation. Is the payment realistic with your other plans?
Decide now to take control of your financial future!
I asked a financial expert and and more importantly my husband, Matt Battaglia to be the guest blogger for this post.
Great blog! Is your theme custom made or did you download it from
somewhere? A theme like yours with a few simple adjustements would really make my blog jump out.
Please let me know where you got your theme. Thanks a
What a material of un-ambiguity and preserveness
of valuable familiarity on the topic of unexpected emotions.
These are really great ideas in about blogging. You have
touched some fastidious things here. Any way keep up wrinting.
[…] of our family’s budgeting & financial wellness is to keep track of our discretionary spending and make sure that we’re on track. Last […]
Hello to every body, it’s my first go to see of this web site; this weblog carries amazing and in fact fine information for visitors.
You should take part in a contest for one of the most useful
websites on the web. I most certainly will recommend
I have been exploring for a bit for any high-quality articles or blog posts in this kind of space .
When googling I eventually stumbled upon this site.
Reading this info So i am happy to show that I’ve an incredibly good uncanny feeling I found out exactly what I needed. I such a lot unquestionably will make sure to do not put out of your mind this website and provides it a glance on a constant basis.
I just want to say I am just newbie to blogging and really savored you’re web site. Likely I’m going to bookmark your blog . You really come with incredible well written articles. Cheers for sharing with us your web site.
Unquestionably believe that which you said. Your favorite justification seemed to be on the web the easiest thing to
be aware of. I say to you, I definitely get annoyed while people think about worries that they plainly don’t know about. You managed to hit the nail upon the top and defined out the whole thing without having side effect , people can take a signal. Will probably be back to get more. Thanks
Hola! I’ve been reading your web site for a while now and finally got the courage to go ahead and give you a hi from Leeds. Just wanted to mention keep up the excellent job!
Good info. Lucky me I came across your blog by chance (stumbleupon).
I have saved as a favourite for later!
I don’t even know how I ended up here, but I thought this post was great. I do not know who you are but definitely you are going to a famous blogger if you aren’t already 😉
I really got into this article. I open it to be stimulating and loaded with uncomparable points of wonder. I suchlike to show substance that makes me suppose. Thank you for activity this majuscule substance.
Greetings I am so happy I found your web site, I really found you by accident,
while I was researching on Digg for something else, Anyhow I
am here now and would just like to say thanks a lot for a remarkable
post and a all round exciting blog (I also love
the theme/design), I don’t have time to go through it all at the minute but I have bookmarked it and also added your RSS feeds, so when I have time I will be back to read more, Please do keep up the superb work.
Greetings! Very useful advice in this particular post! It’s the little changes which will make the largest changes. Thanks a lot for sharing!
I was recommended this blog by my cousin. I am not sure whether this post is written by him as no one else know such detailed about my difficulty. You’re amazing! Thanks!
Hi, after reading this amazing article i am too happy to share my knowledge
here with colleagues.
[…] others help you. We had a few errands to run and luckily my husband, Matt (our guest blogger for great financial advice) took both of our kids for all of the errands. What did I do alone in our house? I took a much […]
Folks should also be aware that student loans are not dischargable in bankruptcy.
Thanks very nice blog!
Thanks for writing this. I truly feel as if I know so much much more about this than I did prior to. Your blog truly brought some issues to light that I by no means would have thought about prior to studying it. You should continue this, Im sure most people would agree youve received a gift.
What a material of un-ambiguity and preserveness of precious experience
concerning unpredicted emotions.
My family always say that I am killing my time here at web, except
I know I am getting familiarity all the time by reading such good content.
Hello, i think that i saw you visited my blog thus i came to “return the favor”.
I’m trying to find things to improve my website!I suppose its ok to use a few of your ideas!!
Hurrah! Finally I got a webpage from where I be capable of genuinely obtain useful data regarding my study and knowledge.
Hi my friend! I wish to say that this post is awesome, nice written and include approximately
all vital infos. I would like to look extra posts like this .
Hello there, just became aware of your blog through Google, and found that
it is really informative. I am going to watch out for brussels.
I’ll be grateful if you continue this in future. Many people will be benefited from your writing. Cheers!
Very nice post. I just stumbled upon your weblog and wished to say that I’ve truly enjoyed browsing your blog posts. After all I will be subscribing to your rss feed and I hope you write again soon!
Every weekend i used to go to see this site, for the reason
that i want enjoyment, for the reason that this this
site conations genuinely pleasant funny stuff too.
I simply want to mention I am new to weblog and definitely enjoyed you’re website. Probably I’m planning to bookmark your blog . You actually have superb posts. Cheers for sharing your webpage.
It’s awesome to visit this site and reading the views of all mates about this post, while I am also keen of getting experience.
I’ve read a few good stuff here. Definitely worth bookmarking for revisiting. I wonder how much effort you put to make this kind of excellent informative web site.
Thanks very nice blog!
Thanks! incredibly useful post!
I simply want to say I’m beginner to blogs and absolutely liked your page. Probably I’m going to bookmark your website . You certainly have tremendous articles and reviews. Thanks a lot for sharing your blog.
I simply want to say I’m newbie to blogging and honestly loved this web site. Almost certainly I’m planning to bookmark your blog . You surely have good well written articles. With thanks for sharing with us your webpage.
An outstanding share! I have just forwarded this onto a friend who had been conducting a insufficiently grounding on this. With he in information bought me dinner simply for the reason that I found it for him… lol. Hence let me alter this…. Show appreciation YOU for the meal!! But yeah, thanx for spending some period to talk on the subject of this matter at this juncture proceeding your internet site.
This is really attention-grabbing, You are a very professional blogger. I’ve joined your rss feed and look forward to searching for more of your great post. Additionally, I have shared your web site in my social networks!
Magnificent web site. Plenty of helpful information here. I am sending it to some friends ans additionally sharing in delicious. And certainly, thank you to your effort!
Its like you read my mind! You appear to know so much about this, like you wrote the book in it or something. I think that you could do with a few pics to drive the message home a bit, but other than that, this is wonderful blog. An excellent read. I’ll certainly be back.
I actually liked the short article. Will link back for your website.
Please spot extra often if there is time. Thank you!
Pretty section of content. I just stumbled upon your web site and in accession capital to assert that I get in fact enjoyed account your
blog posts. Anyway I’ll be subscribing to your feeds and even I achievement you access consistently rapidly.
Have you ever thought about publishing an e-book or guest authoring on other blogs?
I have a blog centered on the same information you discuss and would love to have you
share some stories/information. I know my visitors would enjoy your
work. If you are even remotely interested, feel free to shoot
me an e-mail.
Good way of describing, and pleasant article to take information
regarding my presentation subject, which i
am going to deliver in institution of higher education.
I am regular visitor, how are you everybody? This piece of writing posted at this web page is
in fact good.
[…] of trying to buy everything at once. Pro Tip! After you’ve logged the purchase into your budget worksheet, tape the receipt to the item – just in case you need to return […]
I enjoy what you guys are up too. This type of clever work and reporting!
Keep up the wonderful works guys I’ve you guys to blogroll.
[…] year, I decided to take charge of our family discretionary spending. I was tired of being stressed with trying to figure out how to purchase things we needed and […]
Valuable info. Fortunate me I found your web
site unintentionally, and I’m stunned why this twist of fate did not came about in advance!
I bookmarked it.
I am really loving the theme/design of your web site. Do you ever run into any web
browser compatibility problems? A couple of my blog audience have complained about my
website not operating correctly in Explorer but looks great in Chrome.
Do you have any recommendations to help fix this problem?
My brother recommended I may like this blog. He used to be totally right.
This submit actually made my day. You can not imagine simply how much time I had spent
for this information! Thank you!