Thursday, 20 August 2020

Many students graduate from high school able to speak a foreign language, solve a calculus problem, and recognize elements on the periodic table. However, many of these same graduates leave school without basic money management skills.

Right now only 21 states require high school students to take financial literacy courses, even though countless experts and a substantial amount of data point to financial literacy as essential to helping young people thrive financially.

Financial literacy encompasses many aspects of economics and personal finance. But there are several basic skills high school students need as they begin to manage money.

1. How to open and manage a checking account

To open a checking account, you'll often need your address, phone number, Social Security number, birth date, legal identification, and an opening deposit. At many banks, you can open checking accounts online or in a branch.

Managing a checking account is fairly easy thanks to online and mobile banking, which gives you 24/7 access to your account information. This lets you view transactions and balances, confirm deposits, and hopefully help you to avoid overdrawing your account.

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2. How to pay bills

It's important to pay your bills in full and on time in order to protect your credit score and avoid expensive late charges and other financial problems. When it comes to credit cards, paying off your balance each month will help you avoid interest charges, which can add up quickly.

Most online and mobile banking options include bill pay, which makes paying your bills fast and easy.

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3. How insurance works

At your age, you'll likely be paying auto insurance. Basically, you pay a premium each month and if you're in an accident or your vehicle is damaged, the insurance company will help cover the costs. In most cases, you'll pay a deductible—or out-of-pocket expense—for each incident.

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4. How to budget

A budget gives you control of your finances. Without one, you're essentially “winging it," which isn't a good idea when it comes to money.

To make a budget, list your monthly expenses (rent, car payment, utilities, school expenses) and your monthly income. Compare the two, prioritize expenses, and make adjustments so you'll have enough to pay your bills and other expenses each month.

Today's software makes budgeting fairly easy. Budgeting tools are included with most online banking and there are also numerous budgeting apps.

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5. How to save money

Saving money is perhaps the most important financial skill you need, and one of the hardest to master. Why is saving so important? At your age, it's all about building an emergency fund to cover unexpected expenses.

Let's say your car breaks down and you need $500 to fix it. If you have an emergency fund, you won't have to squeeze the money out of your budget (and possibly not pay another bill) or use a credit card.

You might not be able to save much money right now, but automatically transferring $25 from your checking to a savings account once or twice a month is a good way to start.

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6. How to rent an apartment and pay utilities

To rent an apartment, you'll need a decent credit score and some cash. You'll have to fill out an application and the landlord will do a credit check. If you're approved, you'll probably be required to make a deposit, either first and last month's rent or a security deposit.

Once you move in, it's key you pay your rent on time each month or you could face late fees and even eviction.

Some apartments include utilities in the rent, while others require you to pay your own. If you have to pay your own, you'll need to set up accounts with each utility—water, electricity, natural gas, cable, and internet—which will also require a credit check. You'll need to pay these bills on time and in full each month to avoid having your utilities turned off.

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Start out smart

Even if you didn't learn about money in high school, it makes sense to take some time to educate yourself now. Because even though you're just starting out, the choices you make today will affect you now and well into the future.


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