There are all sorts of things that people wish they would’ve been told before they went out on their own. Here’s a few, about money and money management.
Memorize your social security number
Here’s a simple, practical one. Memorize your social security number. (This also applies to any other number that will follow you for the rest of your life that you will need to use on a semi-regular basis.) You’re going to need your social security number every time you’re looking for a new job, filing taxes, or making money moves. You definitely don’t want to be carrying that card around with you everywhere, either, because of risk of theft and damage. It’s only a couple numbers, okay? Memorizing it will save you time, effort, and confusion down the line. There will still be times when you need your actual card with you, but minimizing them will make your life much easier.
Ask for more
When you’re going into a job interview, don’t be afraid to ask for what you’re worth. If they give you a number for your income that you’re not happy with, let them know what you would be happy to accept. And don’t buckle at the first sign of discomfort. The fact is, that many places can pay you what you’re worth, but would rather not. And if you ask and let them know that this is what you want and need, that’s the only way you’re going to get it.
Remember, the worst they can say is no. If they absolutely can’t or won’t give you what you feel is a good number, then you have a choice. You can accept or not, and I won’t tell you what to do there. That’s a decision based on many factors. But many times, even just putting it out there will be enough to get them to raise their offer a little. Don’t be afraid to advocate for yourself.
Learn about budgeting
The idea behind budgeting is simple. You make this much money, and you keep track of where it goes. Your budget may be simple too, especially when you’re first starting out. But it’s important to have an idea of how much is coming in, and where it’s going, and how much you have available for different things.
Budgeting serves kind of a dual purpose. First, awareness for your current situation. This is the kind of budgeting that you’ll want to do on a semi-regular basis, to make sure you’re on track with your spending. Figure out how much you have, and where each dollar is going (or has gone this last month, for instance). This has been made much easier in recent years with banking apps that keep track of every purchase for you, as well as how much is still left in your accounts. You don’t even have to keep a bankbook to keep track of those things anymore, which was something that older generations had to do if they wanted to avoid expensive fees for spending more money than was in their account.
Prioritize saving money–and not touching your savings account!
You’re probably going to want to have two bank accounts–checking and savings. Use your savings account more than you want to. You may not think you’ll need a couple thousand dollars saved up on the side, like a squirrel preparing an acorn hoard for winter. But you may be surprised how expensive emergencies can get. Your car could break down, you could have a medical emergency. Not to mention, there are long term things that most young people will want to be saving for anyway–expensive things. Like a house, perhaps a wedding someday and your own eventual retirement. None of those things are cheap.
I realize that not everyone has the means to save up the way they “should”. But regardless, it’s important to do your best to save up what you’re able. A good first goal for people who are struggling is to get an emergency fund set up, if life should prove difficult for you in the near future. Initially, a good first goal is 1,000 USD. But gradually, it is a good idea to move up to having a couple months of income put away. Just in case you lose your job or have a really gnarly emergency. And once you’ve hit that, then start saving steadily for a house, wedding, retirement, and all of the accoutrements of life that you envision yourself having.
A good strategy is to put the money into your savings account quickly–immediately after you know you have it to save. Letting it sit around in your checking account just makes it easier to rationalize spending it on something else tomorrow or next week. Because you “have it to spend”. If you move it immediately into your savings account, it’s less likely to burn a hole in your pocket.
Build credit early on
One thing I wish more people told young people, take an active stance on building your credit. When you’re first starting off, the credit system feels unfair. (Because it kind of is, when you look at it.) Some things can be difficult when you don’t have credit–like getting accepted into an apartment or buying a car. And for some reason, the system treats no credit history as worse than bad credit history. Unfair. That’s why you want to get building credit as quickly as possible, to allow time for it to build up.
When you’re building your credit, you’re going to want to do so methodically. If you buy more things than you can pay for, then your credit score will be negatively affected. Also, if you max out your credit card, even if you pay it all off, that won’t be good for your credit either. You want to put just a few things on your credit card–things that you are sure you can pay for. Ideally, things you already could pay for from your checking. And then pay your balance in full, on time. Sure, they will let you just pay the minimum payment. But that’s how you get stuck with lots of debt–it happens little by little.
If you’re just getting started and worried about getting accepted for a credit card, take a look into secured credit cards. You have to put money up front for them (a deposit), and that will be your initial credit limit. But this way the company doesn’t have to worry about what will happen if you don’t pay your bills. Instead, they are assured they have your money already. And because of this, they’re willing to accept you, even though you’re still considered a credit risk. As you pay off your bills on time and build your credit history, some of them will even return your initial deposit and approve you for a regular credit card with them!
Bonus money tip
One little bonus tip for you as far as money goes. When you set up your bank account, make hard boundaries for your accounts. For example, don’t allow your debit card to access your savings account from the ATM. This will save you from dipping into your savings when your emotional resolve is weak. And set your card up to decline instead of allowing you to overdraft your account. It’s true that you may be embarrassed, getting declined in the checkout line. But overdraft fees are expensive. Particularly if they start happening semi-frequently. If you have a hard time keeping track of how much is in your account, this move can be a real money-saver.
Now, these are just little tips. This is by no means an extensive list of everything you should know in order to be a financially stable and healthy household. But they are all things that I wish people would have clued me into earlier in the game, and many of my peers share the same sentiments. I would really encourage you to get nerdy about personal finance on your own.
Go looking for information about how to manage your money, how the credit system works, and the different factors that play into any big or frequent money decisions. And when you do go looking and asking around for information, remember to ask the people who are in a place you’d like to be in. You don’t want to ask someone who is broke how to handle your money. They may have ideas, but if they knew how to thrive, they probably would be doing it.
Remember, your money doesn’t define you. If you are poor or rich, that doesn’t mean that you are a good or bad person. Money is just a tool. And it’s a tool you can learn how to better manage and make use of. So go on out there and see what you can learn!
