personal finances 101

financial life lessons - REDRETICULE.COM

I wonder: Do they teach personal finances at American colleges? They didn’t in Hungary or Germany when I went to school there. I made the mistake that so many young professionals, fresh out of college did. I enjoyed that fact that I finally was making “real money” and didn’t have to live on a scholarship. I ended up shopping and traveling a lot. Meeting my husband at the time made me realize that I needed to change my priority list, handle my hard earned money with a lot more planning and think of the unexpected.

personal finances 101

 

balance your budget

I keep track of what’s coming in and what’s going out of our checking account monthly. This is a great way of catching expenditures that were unnecessary and keep me in perspective how much of our monthly income goes on fixed costs. Keeping an eye on your finances will also help you to figure out where to go for bulk groceries and which local stores will get you the best produce at a great price. Watching the prices and checking the competition before making a purchase will become second nature.

Watching your checking account like a hawk will also hold a mirror in front of you about how much you spend on clothing, shoes and pleasure. The figures might give you the “This must be a mistake!” reaction. Clothing, eating out or days spent at the spa are the easiest areas to spot and essentially cut back on. Putting yourself on a 2 month spending ban or a smaller budget can make a big difference.

manage your credit

I didn’t know what a credit score was until I moved to the United States. …and I couldn’t get any credit cards until I spent a certain amount of time here and started building a history. Credit cards are powerful. They are easy to get and hard to resist. You’ll start kicking yourself after it’s too late, but you’re still paying off the debt with those hefty interest rates. I didn’t know that not using a credit card at all can be as bad for my credit score as constantly being overdrawn or skipping payments. As long as you maintain a balance of 40% or less of your total credit limit on your cards, you’re in great shape to build a good credit score.

invest for a retirement

It’s crucial. You can never be too young to start putting money aside for retirement. 401Ks and IRAs are great investment opportunities or if you are one who follows the stock market closely, you might want to look into investment options there.

review your bills

I like to review our utility bills once or twice a year. It gives me a good idea of what we spend which season or how our usage changed. I will certainly not hesitate to complain at customer service when I find that my cable company gradually increased my rate without any warning. (It is sad that a loyal customer actually has to call and complain to get a break.)

taxes

I hate taxes. I get the itch as soon as tax season kicks in. Yet, it is so important to pay attention to details when filing your personal taxes. Mortgages, home improvement projects, certain medical expenses that weren’t covered by health insurance are tax deductible. A home based business allows you to write off part of your home, utilities and mileage. It takes some digging and reading, but it is worth while. …and if you have TurboTax, it really is much more pain free.

set goals

Most goals in our lives will ultimately tie back into our finances. You need to be able to save enough in order to take a trip to Europe, buy a beach house, or start a family. …and it takes a lot of work and discipline to skip a dinner out this week or cut out a couple of those nice to have subscriptions in order to put money towards watching a soccer game in Europe some day.

What are your best practices / lessons learned in personal finances 101?

Photo by Rick Robillard

  • http://stilettointhecloud.com/ Lindsay Ava

    Thanks for writing up this post! Although I am still at university, the time is fast approaching and I still struggle to budget! :)

  • Edwige A.

    Humm, such useful information and tips! Thanks so much for this post. This is something every young folk needs to know.
    Edwige | http://www.hypnozglam.com