There are certain things that just are not taught in school, and personal finance is one of them. If you do get a chance to learn, it is probably in college, and by then you will only be focused on spending your student loan money to party. If we are able to engrain it into our children early on, there is at least a better chance that once they are old enough to start spending their own money, they can be responsible and not dig themselves a hole like I did. My parents were great, don’t get me wrong, but as soon as I was eighteen I signed up for a credit card due to a free merchandise giveaway, starting spending, and there was no looking back until I had to dig myself out of debt. So, our children do not make the same mistakes as us, make sure you teach them a few of the important things that were not taught to us.
Create a Budget
Studies have shown that most American’s actually do not hold down a successful budget, two-thirds of the population in fact, and it is not surprise why; budgets are difficult. You need to take note of every dollar that comes in, make sure you have enough to pay every necessary monthly bill, and then leave a set amount left for food, gas, and to save. Obviously, you will want to have more left at the end of the month, or being at zero if you have budgeted correctly, and spending more than you earn will only set you up for disaster. Continue to tweak your spending so that you spend less and save more.
Avoid Eating Out Every Day
The only way to spend less and open up more to be able to save is to reduce unnecessary spending. Now it will be difficult to eliminate all spending outside of monthly bills, I get it, but if you actually take your bank account or credit card statement for the previous month and went over each purchase line by line, circling what you probably could have avoided, it might amaze you how much money you are losing out on. Something as simple as doing regular grocery shopping to be able to have breakfast, lunch, dinner, snacks, and even brew coffee from home could be huge savings.
Pay Attention to Your Credit
Credit is one thing that I really did not care about when I was young, and boy was I in for a shock when I pulled my report and saw how low it was (I’m embarrassed to even say). It took consecutive years of a perfect payment history, finally paying off debt, and not opening up new accounts in order to build up my credit score. As we get older and want to borrow money, get a house, or even lease a car, our credit score is the first thing lenders look at. We must teach our children to check the report each year, do not charge up accounts, and pay every bill on or before the due date.
Coming from experience, this is another that I should have learned on my own prior to being in my thirties is to live modestly, no matter what income level you are at. Whether it is being in a house that you can comfortably afford, getting a new car with an affordable lease payment, and looking good, but do not need name-brand clothes probably is known by the rest, but I was a late bloomer when it came to that. The more money you save on these items the more it opens up extra money to have great life experiences such as vacations, concerts, sporting events, and even having more leftover to contribute to savings.
Start Saving Right Away for the Future
When you are, young and starting out in the workforce the furthest thing from our mind is retirement, even though it sounds cliché, it is true, the earlier you can save the better. Putting money aside from a paper route, bagging groceries, or waiting tables, it is important to save early on for expenses that you can avoid putting on a credit card. As you start your career and have more to work with, more focus needs to be put on retirement; increasing contributions to 401(k) each year. It may all seem like common sense, and to me it does now, but whether I was taught and chose to ignore, it would be nice to relive my youth, but I would definitely have a long talk with my younger self.