Even though money management is an important part of life, it’s common for teenagers to enter adulthood without ever learning how to set a budget for themselves. Even children who receive allowances or work after school jobs can be unaware of ways to procure long-term financial health. In an ideal world, there would be classes starting at a young age teaching financial literacy, but these services aren’t always available, leaving the task to the parents to have these much-needed conversations. Here are a few lessons that every adult should have a firm grasp on regarding money matters.
The Security of Financial Information Is Important
In today’s world, financial fraud is a bigger and more complicated problem than ever before. It’s easy to be scammed online, especially if you don’t understand the risks. Before someone gets their first credit card or debit card, it’s important they understand how to protect their information.
Building Your Credit From Zero Isn’t Easy
Many people make it well into their adult lives without ever understanding the importance of a good credit score or the meaning of a credit report. By teaching financial literacy to today’s youth, they can begin their financial lives understanding how important it is to build a healthy credit score as soon as possible. Contrary to popular belief, zero credit is worse than a bad score. When you don’t have any credit history, you are looked at as a more questionable applicant. By building up a healthy credit history as early as possible, you’ll have an easier time applying for important things like apartments, car loans, and cell phone plans. It will also save money when shopping around for interest rates.
Ruining Your Credit Is Very Easy To Do
Without understanding how important a credit score is, it’s very easy to take it for granted. It may not seem like a big deal to pay your water bill late or to ignore unnecessary extra charges on a cell phone bill, but decisions made now will stay on someone’s credit report for up to seven years.
Building Wealth Is A Habit That’s Easier To Start Early On
When you understand how to build a healthy budget, you also understand how to build savings into that budget. This includes having an emergency fund ready to cover unexpected issues such as auto repair or medical bills. Without a contingency plan in place, people sometimes go into debt by having to rely on high-interest bank loans or credit cards to cover the emergency expenses.
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