Finance 101: 3 Money Truths You Need to Know
Even if you’re still on the family phone plan, there is no reason you shouldn’t be financially literate. A recent study conducted by education tech company EverFi provided shocking results: The average U.S. college student can answer only about a third of basic financial questions correctly. Scroll through to learn about five must-know money truths to help you plan for a more successful future.
Your late teens and college years are a crucial, but often overlooked, time to build credit history. And you don’t need to rack up debt to do so. Opening a basic credit card at a young age—only if you pay it off in full each month—can help you qualify for higher-quality cards with better rewards. Keeping a credit card, and using it responsibly, can also have positive effects on your credit score. Rule of thumb is to never spend more than 30% of your available credit each month. Be careful with how much you spend. Even if you pay off your bill in full, charging too much each month (this is called “utilization”) will have a negative effect on your credit score.
Make Excel or Google spreadsheets your friend. Or, if you’re not into the grid situation, download a money-managing app like Mint. Figure out exactly how much money you will have for the next six to 12 months and plot out how you plan to spend it. Studies show that 40% of college students’ budgets go to discretionary purchases (e.g., coffee, concert tickets, and snacks). If you don’t track your spending, you’ll never know that your late-afternoon grande latte habit costs you close to $30 a week.
Time argues that healthy habits translate into greater wealth. How, you may ask? Think about the financial burden of unhealthy food and beverages. Cutting back on booze and drunken late-night eating can save you hundreds of dollars per year. Being active is also critical for both your physical and financial health. A study from Cleveland State University found that people who work out a minimum of three times per week earn 6% to 9% more than those who don’t. Think about that the next time you want to hit the snooze button instead of taking a morning Spin class.
Head over to Time to read the full article on must-know financial advice.
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So is your financial knowledge up to par? Share any tips you have with us in the comments, and we could feature them in our next Career and Money article!
Opening photo: Courtesy of Vogue