“Money Smarts: Financial Tips for Teens and Young Adults”

Written By Tina Martin

Learning how to manage money at a young age is an essential life skill that typically isn’t taught in schools. For the best chance at a prosperous financial future, it’s important for young people to learn the basics of budgeting, saving, borrowing, spending, and investing wisely. If teens and young adults establish smart money habits early, they can learn to stay out of debt, build wealth, and flourish throughout their lives. Raxxmorz offers the following financial guidance to help young people stay on track.

The importance of budgeting

Whether you are in high school, college, or a later stage in life, it’s difficult to figure out where all your money goes each month if you don’t track your spending. Even if you are getting paid in cash, you should use free tools like Mint or Personal Capital to manage your budget, record all income and expenditures, and take control of your finances. The only true way to start accumulating money is by making it a deliberate habit. When planning your monthly budget, make “savings” a line item. Even putting away a small amount of money each pay period can really add up over time.

The true cost of car ownership

Everyone needs transportation to get around, but when planning your budget, you need to consider all the costs associated with driving. Of course, you may have a monthly car payment, but you also need to factor in gas, maintenance, and insurance costs as well. Due to being considered a higher risk, young drivers typically pay more for auto insurance than those in the 30- to 69-year-old age bracket. Where you live, as well as your gender, driving record, and the vehicle’s safety features also play a role in your insurance premiums, but it’s worth shopping around to see what deals are available.

The responsible way to use credit

Your credit score can affect your insurance rates as well as your ability to purchase items, rent an apartment, and get a job. Becoming an authorized user on one of your parent’s credit cards or acquiring a secured credit card are some of the easiest ways to get a credit file opened in your name. Many companies also send credit card offers to college students. When it comes to your credit score, the most important thing is to pay your bills on time. Even one late or missed payment can cause your score to drop and can stay on your credit report for several years.

Before charging anything to your credit card, be sure you have the means to pay it off. Per Magnify Money, Americans’ paid credit card interest totaled $113 billion in 2018, up 49% from five years ago. You don’t want to start racking up credit card debt and become one of the statistics.

The smart choice for college

Though there is a societal push for every single person to go to attend a 4-year university, it shouldn’t be considered a must for everyone – especially if you are crippling yourself with serious debt to make it happen. According to Forbes, 44.7 million borrowers in the U.S. collectively owe $1.56 trillion in student loan debt.

Depending on your circumstances, a smart choice might be to work for a few years and save money for college. It might be to go to community college for two years before transferring to a university, or it may be smart to go to trade school and learn a skill that allows you to get a well-paying job quickly.

Alternatively, if you’re set on college but need to work while you’re in school, an online college offers the best of both worlds. You can adjust your schedule with work in mind while you still stay on track with your academic goals. Besides offering degrees in nearly every industry, most online universities offer competitive tuition rates.

Set yourself up for financial success by tracking your expenditures, handling credit responsibly, and making wise choices about money. While no one can guarantee you millionaire status, through research, financial education, and sound decisions, you can be in a prime position to prosper financially throughout your life.

Raxxmorz offers a range of articles to propel you toward financial success. Email us today at Raxxmorz@consultant.com.