2.22.23

Money Lessons They Don’t Teach In School

Focused young woman with credit card and laptop

Eight things you should know for building and maintaining personal financial health.

Few of us receive formal education on how to manage personal finances. That’s why we’re sharing these eight lessons that will set you up for a lifetime of successful financial decision-making.

Spend less than you earn

Spending every dollar you earn means there’s no money left to save. Savings are an important factor in achieving financial stability. Many people succeed at saving by “paying” themselves first with automatic deposits to a savings account.

Emergency funds are always a smart move

Unexpected expenses such as medical bills, insurance deductibles or the loss of a job can affect anyone at any time. Having an emergency fund can mean the difference between going into debt and weathering a financial storm. As soon as you start earning, start putting money aside in an emergency fund.

Be strategic about debt

Not all debt is bad. Good debt can help you generate more wealth, like when you use a loan to start a business. Good debt can also help you attain an asset that’s likely to grow in value, such as a home loan.

Bad debt includes high-interest loans, loans you can’t afford to repay, and credit cards where you only pay the minimum.

Be strategic about any debt you take on and examine how it will affect your long-term financial health. 

How to use credit cards wisely

Credit cards can be a convenient tool, if used wisely. A good cash back credit card or rewards credit card can earn cash back on purchases and offer perks such as identity theft protection.

To keep your credit score at its best, be sure not to max out your cards. Many experts recommend utilizing 30% or less of your available credit to get the best credit score.

Start saving for retirement now

In your 20s, retirement can seem too far away to worry about. Even in your 30s, retirement is still decades away. However, the sooner you start to save for retirement, the more you’ll have when you decide to stop working.

If your employer has a matching program for retirement, be sure to take advantage of this free money.

By saving for retirement early in your career you’ll tap into the power of compounding interest. This means in addition to earning interest on your savings, you can earn interest on the interest. See how much your money can grow with this compound interest calculator.

Invest in your health

Health is wealth. You only get one body and good health will help you live a fuller life and potentially reduce healthcare costs down the road. Invest in food and activities that promote physical and mental wellbeing. In addition to feeling better, good health will keep you ready to take advantage of economic opportunities that could allow you to earn more money.

Never ignore a money problem

Financial problems don’t just disappear. At the first sign of a money problem, quickly investigate and address it.

If you have overdue credit card or loan payments, talk to the lender. Do not wait until your account is turned over to a debt collector. Even if you believe you do not owe the debt, you need to take action. Discover more about what to do if you’ve been sent to a debt collector,

Learn how to say, “No, thank you”

There are lot of stores and service providers who’d like to get more of your money. Often they get it easily just by asking. Have you ever experienced upselling? This is when a salesperson persuades you to buy more than you initially intended.

Before you go shopping for a big-ticket item, out to restaurant or for any service, know what you want and exactly how much you intend spend. When the salesperson offers extras, simply say, “No, thank you.” The more you practice saying no, the easier it will get.

Another time you might need to say no is when friends want to do something that’s out of your budget. Sometimes you may need to bow out of an activity gracefully, but you could also suggest a less-expensive alternative that allows you to spend time together and have fun.

Consumers provides banking services for more than 132,000 members. If you have banking questions, call us at 800-991-2221. We make it easy to bank how you want, when you want.

Federally insured by NCUA

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