Not everyone starts out a financial genius. Most people do not. I have honestly addressed my past mistakes in articles on the Goalry set of publications. No matter what, you will have a learning curve. You can learn how to invest wisely though.
The great news is that even if you started out horrid at finances, you can get better. Just as little children learn to be quiet and not talk during church or class or when their parents work from home, you can learn savvy financial management.
- Start by reading up on all things fiscal. Start here of course. You can find a number of helpful articles to learn budgeting, savvy banking, investing, property purchasing, and estate planning. If you start with this Business Loan Terms and Definitions, you will know the basic lingo of finance. You can go from there.
- Open your first accounts. Open a savings account first. Make a separate account from your checking account. Deposit to the savings at least once per month. You should put in about ten percent of what you earn. Sites like wealthry offers low-entry savings accounts with a high-yield interest rate.
- Open an investment account. You probably will not have the funds to start at T. Rowe Price or another major brokerage. That is okay. If you teach school, jump on that TIAA-CREF account they offer you. You want that. You can open a Stash or an Acorns account if you do not have a work-related investment account option. These accounts let you begin saving for your future with just pennies. You can link them to certain bank accounts, debit cards or credit cards, and have the account use roundups to deposit your change from your purchases. If you buy a coffee at Starbucks, and pay $2.32 (Pike’s Place), the investment app behaves as if you paid in cash with $3. It deposits the .68 cents of change you would have received into a virtual change jar that gets invested as you designate.
- You create a budget… and you stick to it. You stick to it like glue. You love your budget and it loves you. You budget designates how you pay for each item and when. Oh. You did not know that due dates constitute part of your budget? As my CPA ex-boyfriend, Loy, says, “Now, you know.” The budget does not just allocate how much you pay each creditor or debtor each month; it tells you when, too. The inclusion of the due dates lets you plan accordingly so you do not incur late fees. You can try the envelope budgeting system when just starting out with a few bills. This also helps you build a terrific credit score.
- Build up your credit score. When you first graduate college, you probably have no credit score. You probably have no credit unless you signed up for every credit card offered at the welcome back fair on the campus green. Now, if you did that (like I did), you instantly had meh credit because you established a gazillion accounts at one time. It happens. Open one. Really. Do as I say, not as I did. You can be so much more adept at money management than teen and 20-something me was. I write here to make sure of that. Open one credit card. Put something small on it. Immediately pay that sucker off. The next month repeat the process. You will build awesome credit.
- Start planning for the future. High school or college is a great time to meet with a financial planner for the first time. I wish I had. They can let you know just how to fund your goals. Maybe your only goal at that point is an education, but they can help you figure out the how.
You can become savvy at financial management. You can have money in the bank and in investments. You start today and work at it a little bit each day. You can do it.