5 Essential Personal Finance Tips for Students and Young Adults

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Students and young adults are faced with a lot of tough decisions in life. But sometimes, they aren’t equipped with the right information to make informed decisions in the first place. I think this is especially true when it comes to personal finance.

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When you become a student, you’re beginning to get your first taste of what it’s like to strike out into the wide world on your own. A huge part of this is becoming responsible for your finances for possibly the first time in your life.

But here’s the problem. How much education did you receive about managing money up until this point? Probably not very much. So how are you supposed to be able to make good financial decisions?

Today my goal is to give you 5 essential financial concepts to understand as a student. If you can grasp these now, so early in life, my friend you’ve got a bright future ahead of you.

I’m sure you’ve all heard the phrase invest in yourself. But what does that actually mean? Does that mean time, energy, money? And why is it important?

Well generally when we think of investing in something we might imagine investing money in something like the stock market. And the stock market is known to reward people really well for doing so. It’s an easy to understand relationship, I put in x amount of money and I should earn an x return.

But what about investing in ourselves? Let’s try and quantify it. Let’s say that you’re currently expecting to graduate with a starting salary of $50,000. Assuming you’ll be working for 30 years and your salary raises with the average pace of yearly raises which is about 3% you’ll earn about $2.5M over the course of your career.

So that’s our very basic base scenario. But what if we decided to invest some of our time and energy into learning new skills. For example, maybe you’re taking a degree in finance but you also decide to learn some programming on the side so that you’re able to work in the financial technology field.

Let’s say that this increased skill set brings your starting salary out of school to $80,000 because you have a highly valuable skillset in a highly lucrative field. Assuming the same calculation as the previous scenario, you would now be bringing in about $4M over the course of your career. That’s a huge difference. We’re talking about 1 and a half million dollars more just because you decided to invest some time and energy into yourself right now.

Credit scores are also important for when the time comes and you’re looking to get a mortgage or different kind of loan like a line of credit or car loan. Having a higher score allows the bank to rank you as a more trustworthy borrower and therefore give you access to lower interest rates which can save you a lot of money

Your credit score is a number that generally ranges between 300-850. Generally it’s broken down something like this with 300-580 being considered poor, 581-680 being fair, 681-740 being good, and 741-850 being excellent.

And here’s how your credit score is calculated. 10% of your score comes from credit inquiries, another 10% from your credit mix, 15% for credit history, 30% for credit utilization and 35% for payment history.

If there’s one lesson you can learn about dealing with banks it’s that they’re not your friend but they’re also not your enemy either. You have to treat it like a business relationship and protect your own interests because the bank will be doing the same

Most banks should offer some form of student bank account and credit card that charges no monthly fees and has unlimited transactions.
Banks generally don’t charge massive monthly fees but when you’re a student, losing $15 a month to banking fees plus paying any additional transaction fees can really add up. So shop around and get set up with someone who’s not going to cost you anything to use right now and don’t be afraid to consider online banks.

Saving money as a student is tough, there’s no doubt about it. But if you find yourself in a position where you are able to sock some money away that is great! You’re probably wondering what now?
Well first of all, you’re going to want to ignore any talk of penny stocks, options, Tesla, or bitcoin. I mean I’m not your dad you can do whatever you want but take it from somebody who’s already done all that jazz. You’re going to want to slap this money into a high interest savings account and let it chill.

Видео 5 Essential Personal Finance Tips for Students and Young Adults канала Steve Antonioni