One of the most major things I wish I had learned in school was how to manage my personal finances. It’s one big life lesson that is never covered in a single standard math class. You learn plenty of formulas and how to derive those formulas, but most of us, unless we specifically study finance, will not learn very much about how to handle our personal finances. We’re here to rectify this problem. Here are five basics you should absolutely know about your money:
- How to build a budget. In its most basic form, a budget helps you track what income you receive and what money you spend, ideally to prevent spending more money than you make. A standard budget for a simple, single-person household is pretty easy to create and to keep track of—there are apps for that. The more people in the household and the more sources of income, the more complicated it becomes. If it is too difficult to stay on top of, you might consider talking to a CPA about helping you build the framework.
- Where to find a good savings account. Most people opened a savings account when they were children or teenagers and haven’t really thought about that savings account since. You might be earning a little bit of interest, but most savings accounts offer dismally low interest rates. This isn’t true of the entire system, however. You can find savings accounts that offer up to 1.05% on the money that you just have sitting in the bank.
- The importance of credit. Many people who have come to age in the era of incredible debt are wary of getting a credit card. They then try to buy a car and are turned away because they do not have any credit to speak of. Credit isn’t bad, if you use your card and pay it off immediately. Don’t allow it to snowball, however, and you won’t find yourself under a mountain of credit card debt.
- Investments – Too few people invest. It can be scary, if you know nothing about the stock market, to try to buy stocks. You don’t have to buy stocks. There are hundreds of different types of investments, including buying a home. Find a low risk, moderate reward system that works for you.