Spring break is coming up. I’ve been out of college for a bit, I still remember the fun I had attending.
While I learned so many things in and out of the classroom, I look back and wish the curriculum offered more personal finance lessons. Those first few years after graduation could been spent building up wealth.
If you’re about to graduate or you have family who’s about to embark on their own, here are some financial lessons to pass on:
Too many times I’ve seen budgets presented in the most unappealing way – as a constraint and a reason to say no to certain expenses. It doesn’t have to be that way and the most effective ones aren’t.
An easy budget to set up is the 50/30/20; it allows you to not only take care of the essentials and savings, but you can have money set aside for your personal enjoyment. You divvy up your paycheck into three basic buckets:
- 50%: Needs
- 30 %: Wants
- 20%: Savings and Debts
While not a perfect system, this budget is easy to set up and a way for you to start planning where your money goes.
Better to Invest a Little Now Than More Later
When I started working, I believed that I’d have to wait years before I could start contributing for retirement. After taking care of bills and paying down debt, I didn’t have much left over anyway. However, a co-worker showed me that even something now is better than waiting. You can start small and have an automatic transfer sent to your 401(k) or IRA.
The Power of Compound Interest
One lesson that amazed me was seeing how compound interest works with investing. As time passes, your contributions can grow faster as the balance builds. (Which is why now is a great time to open up that IRA if you haven’t already!)
Now here’s the kicker – the opposite also hold true with debt.
If you are carrying high interest debt, you’re sinking further in the hole as time passes. Do yourself a big favor now and get rid of your debt quickly. Whether you prefer to use a debt snowball or an avalanche , having financial freedom is a wonderful goal to reach.
If you could give advice to your yourself on finances, what would it be? What was the best tip you’ve heard from others?
Still need to file your taxes? Last tax season 75% of taxpayers received a tax refund of close to $2,800 and the average refund so far this tax season is close to $3,000 so this is a great time to file your taxes, get your tax refund, and start these money saving tips.