I often catch myself saying, “Why didn’t I learn this in school?” This is ironic because I have not been out of school long and I am a teacher! What money lessons do you remember from school? Even as a millennial I feel like I left school not being prepared for the real world financially.
As a fourth grade teacher, my students come to me with a basic knowledge of money. However, as they progress through school, like I did, who is responsible for teaching more important money lessons? Parents … teachers … the internet … The $avvy Couple? This is our list of 8 important lessons you should have learned from school or your parents.
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1. Credit Cards
Credit cards are an important tool to build credit. However, they are the worst debt to carry. The biggest lesson about credit cards is that you should NEVER carry a balance. Interest rates on credit cards are ridiculously high averaging somewhere around 15%.You never want to get stuck in a trap where you are only paying the minimum balance. This is a money maker for credit card companies and you will be stuck on the hamster wheel forever trying to pay it off. If you are opening a credit card you must be responsible. Start out small and make sure you are able to pay off each bill. As long as your responsible credit cards can have some great benefits, cash back, miles and building credit to name a few.
Money Lesson: Credit cards are a great tool to build credit and earn rewards. However, you should only spend what you can pay off immediately.
2. Frugal Lifestyle
Being frugal is definitely a lifestyle we want to help more people live. Making small daily or weekly changes to your lifestyle can have huge effects on your personal finance. I think when people think of the word frugal, they think cheap. I know my brother does. There is a huge difference between being frugal and the TLC show Extreme Cheapskates. We are not saying to live on candlelight and hang out by dumpsters of restaurants/bakery’s and wait for them to take out the trash. That’s just disgusting. Being frugal is being intentional with your money and always getting the best value. You can live a frugal lifestyle that is extreme. Start out small and reduce the number of coffee stops you make in a week then a month then a few months. Stop eating out so much! Get over having to have name brand items. We do most of our grocery shopping at discounted stores like Aldi’s, PriceRite, or Walmart. Comparing the ingredients to the name brand ingredients they are often identical and significantly cheaper.
Money Lesson: Living frugally is living intentionally with your money. Save in areas you can so you have financial freedom in areas that really matter to you.
If you are one of our regular $avvy Savage readers you know how much we stress about having a budget. We really cannot stress the importance enough and that is why it has made it on to this list of important money lessons. Budgeting is a system that tracks your money in and out. After you get use to budgeting we recommend giving a purpose to every dollar. As children, we saw our parents spend countless hours making sure the “checkbook balanced”. Luckily, Millennials do not have to be old school anymore and balance checkbooks. It is very important to have control of your finances though.
Money Lesson: Categorize your spending and know how much income you have coming in to cover these expenses. Learn the difference between wants and needs.
4. Negotiate Everything
According to Kelan, “Everything is negotiable” I, on the other hand, do not fully support that statement, but it does hold a lot of truth. If you are headed out to the grocery store a gallon of milk is not negotiable (Kelan would say different). However, something like buying a used car is completely negotiable. Being able to negotiate is definitely a skill, something Kelan is great at. You need to always do research on anything you are about to negotiate. This way you have facts to back up your negotiation battle.
Kelan does all of our negotiating. We do try to negotiate everything we can. Some include; house, cars, cable, internet, phone, insurance, Craigslist or garage sale purchases, vacation, and much more. Two of the biggest things that we learned when you place a call to try to get a bill reduced is to always begin with the person’s name and asking for help. “Good afternoon to you too Sandra, I am wondering if you can help me today…”. Using someone’s first name along with “can you help me” always give you the best chance of getting what you want.
Money Lesson: It doesn’t hurt to ask for a lower price on anything! The worst they could say is no. Negotiating is a battle, be prepared.
Stay away from debt as much as possible! In some cases, debt is unavoidable. If you need a loan, be smart about it and shop around for the best rate. Consider other options for school. Most of us as millennials have a large amount of debt after graduating college, this can be avoidable. Kelan and I went to a local community college for the first two years of our education. We made another smart choice to live at home and commute together to school. The $avvy Couple was able to walk away DEBT FREE for our first two years. Consider if living on campus and getting the highest priced meal plan is the best plan for you long run. It is so hard to think about life after college. However, it will be over before you know it and then the debt you accumulated will sink in. To quote the best: “Attack debt with a vengeance,” said Dave Ramsey.
Using a tool like LendEDU is a great way to see if refinancing your student loans would be a good option for you.
Money Lesson: Try to live as debt free as possible. Do not carry any type of debt unless it is unavoidable!
Related Article: How I Paid Off $68,000 in Student Loans in 37 Months
6. Dangerous Advertising
The media loves to pull you in for the “once in a lifetime” deals. We have all heard them before and some of us have fallen victim to the seller scams that are advertised. With living a frugal lifestyle, I do my fair share of couponing. Be careful because often times the deal might not be worth it. $1.00 off anything that causes you to buy more than two might not be worth the deal. If it is something that you go through fast or use on a daily basis, then I would say that it’s worth it. Same goes with coffee deals, after you buy 10 they will give you one for free. You have now spent over $20 on coffee just to get that next one free. Have you ever opened your mailbox and received a key from a car dealership or a scratch off saying you won? Also, a scam to get you to come in. Use good judgment and think out the deal before you fall victim.
Money Lesson: Do not fall for the advertisements that the media puts out. Rarely is the deal actually worth it.
Related Article: Don’t Fall Victim to the Millennials Money Trap – Cars!
Retirement? Yes, you read that right! It is never too early to start thinking about retirement. Actually, you should have started to think about retirement yesterday! Planning for the future is SO important and you do not want to wait to start planning and lose out on potential capital gains, compound interest, and company matching. Make sure that you have a plan when it comes to retirement. Over at Kissmetrics Blog, they have a great visual (below) that gives life to the words “It is never too early.”
Money Lesson: Get a plan for retirement and start saving as soon as possible. What you put in now, will pay off in the long run!
Growing up you do not learn a lot about taxes. This is unfortunate because we all will eventually begin to start filing and enter the 1040A, 1099 world. Most college students can file for free. One of the biggest lessons to learn about taxes is what tax credits and deductions you can claim. Another important lesson is to keep your tax papers organized. If you are filing alone or with a significant other a two pocket folder is a great way to stay organized. Kelan places his documents on one side, I place mine on the other, and share documents hang out in the middle. We have each folder color coded to a year and this provides an easy location to look up any questions on previous years taxes.
Money Lesson: Stay organized with your tax documents and check to see what credits and deductions apply to your situation.
What are some money lessons that you think should be taught?
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