Finance; it's a dull yet essential part of life. Whether you are living paycheck to paycheck or looking to make money from your savings, learning how to become more financially literate will only help you down the line. With the average American having $9,000 less in their bank accounts in 2022 compared to 2021, we think it's time we all became better with our money. Join us, and we'll make the mundane task of money management a little easier and a bit more fun.
So, what is financial literacy? In its simplest form, it's just having a basic understanding of your money, where it's coming from, and where it's being spent. You should remember three words: budgeting, saving, and investing. Everyone should know how much they earn and how much they spend each month; this will allow you to cut costs, make a saving, and even put some money away for a rainy day. Once you've understood how to budget and save, you can move on to investing through stocks, property, or simply changing your bank account to a better rate. So, if we agree that all good financial decisions come from budgeting, what can we do to step up our budget game?
Money management is at the heart of budgeting. The average American reportedly has around $41,000 total in savings, including checking, savings, money market, and prepaid debit cards, but the median (meaning the most common amount saved) sits around $5,300. We can all do a better job at budgeting our money, and we think the following tools will help you get a better grip on your finances.
First, we have a great Youtube channel that aims to reduce debt through budgeting and education. Debt Free Millennials, spearheaded by creator Justine, focuses on the very basics and explains the tips and tricks to budget management in a clear and informative way.
Consumer.gov is a clear and concise website that deals with all aspects of finance. They have you covered if you don't understand card prepayment or how to open a bank account. Check out their 'Making a Budget' section for some top tips.
With over 3.3 million users, Personal Capital is one of the most popular and easy-to-use budgeting apps out there. Personal Capital tracks simple elements such as spending habits and saving schemes, and they even offer financial advisors that are already integrated into their system. It's easy to use and definitely worth a try.
Now, sometimes budgeting can be hard, especially for those who are self-proclaimed ‘bad’ with their money, but that doesn't mean you can't manage your finances. Greenlight is an app with kids and teens in mind and allows parents to have a certain level of control to ensure milestones are being met. Maybe it's not for you, but it's certainly an app to consider if you're slightly younger.
Finally, Google Sheets and Microsoft Excel. That's right; you don't need to pay a subscription or download an app to start a budget. You don’t have to be an expert to get a good start when using sheets or excel, and if you're still struggling to build a template, then the internet will have all the answers for you. Start your budgeting adventure with the completely free Google Sheets and Microsoft Excel.
Taxes. No one likes them. There's nothing quite like the disappointment of receiving your first-ever paycheck and then discovering that they've taken...'How much!?' Understanding how taxes work is a life skill everyone should have. Knowing why your money is taken and where your money goes helps take the sting out of this procedure somewhat. Taxes as a whole is a tedious and sometimes complicated-looking subject, but getting a grasp of the basics can really help you avoid some expensive and stressful mistakes in adulthood.
This animated video teaches us why we pay taxes and what to expect once earning.
The IRS even has a deducted site providing lesson plans and resource lists for teachers and teens to use.
The good folks at TaxSlayer have a blog piece covering teen-focused worries like paying taxes on part-time jobs and small-income gigs.
Simply put, credit is when a customer can receive goods or services before payment. Establishing a good credit score is vital in adult life, helping you responsibly borrow for a multitude of things.
When you take on credit, be it a card or otherwise, you'll have to sign an agreement. This usually means making monthly payments against your borrowed amount, which will often be combined with interest rates and other fees. Smart borrowing can be a helpful asset in life, while irresponsible borrowing can place you in severe debt. Financial discipline when it comes to credit is a must.
This quick read should definitely be bookmarked. It goes over the history of credit bureaus, credit score meanings, and how to build your credit when you turn eighteen.
This informative video shows teens (and their parents) the first steps to joining the world of credit cards.
Debt. It's a scary word. No one likes the idea of owing somebody, but in adult life, having a little debt is completely normal when managed correctly. In fact, once you combine things like credit debt, student, auto loans, and home equity, amongst others, the average consumer debt in the US stands at $96,371. The average consumer owed $5,221 in credit card debt alone in 2021. To unravel debt and its many factors, we have the below resources.
1. Debt 101: A Guide For Parents And Teenagers
This invaluable guide helps give the basics as well as ways to avoid spiraling interest payments.
2. Credit Cards: Mistakes and Best Practices
We all make mistakes when we’re younger, but making one with a credit card can have huge repercussions. This easy-to-follow video breaks down nine essential rules to follow when getting your first credit card.
3. What Are The Different Kinds of Debt?
A precise and informative resource on US consumers' main debt types.
Having a Rainy Day Fund may not sound very edgy, but do you know what is rock n' roll? Having freedom through some spare cash in your pocket! When we're younger, we tend to save aside just enough money to pay for our usual bills - be they utilities, rent, travel, etc. What we learn, usually the hard way, is that life rarely goes to plan. An unexpected cost, say a car repair, broken boiler, or vet bill, can suddenly land in our laps when we least expect it. This is why having a Rainy Day Fund can sometimes prove to be a real lifesaver. Planning and preparation prevent poor performance. We suggest looking at the below resource to understand the basics of this most useful life tool.
Rainy day fund: Definition, purpose, how much to save, where to keep it
Sam Walker-Smart is a British culture journalist currently based in Bristol. His work has appeared in CLASH, The Huffington Post, Vinyl Me Please, Barcelona Metropolitan, Little White Lies, and many other outlets. He enjoys weird folklore, sad songs, and good beer.