My sister Diana recently complained to me about her change in taxes this year. As we discussed possible life changes to that may have caused this she mentioned that she started contributing to a 401k plan– and it made her feel like an adult.
It also reminded me of how much young people like me don’t know about personal finance.
Maybe it’s because it’s so personal that we don’t talk about it a lot- but if my parents aren’t teaching me about money matters after college- who is? Sure there’s lot of programs that reach out to teach us about credit card debt (because when we are in college we were willing to sign anything for a free T-shirt) but who’s out there telling us about saving money, buying insurance, or using flex spending accounts?
A couple of years ago I decided to get more of a clue so I picked up the good ol’ Personal Finance For Dummies and learned a thing or two. I wouldn’t say I’m an expect like Krissy but at least I’m aware of the few things I should know about.
Here are five tips to improve your young personal finance life.
- Save, Save, Save! Sure our entry-level jobs may not allow us to save a whole lot but I make sure that I am at least contributing something to a 401k or Roth IRA account. Most of the time it’s deducted from your paycheck automatically and most employers may match your contributions so you are leaving money on the table by not contributing. I also have a ING Direct savings account (love that higher interest rate) that is set-up to automatically transfer money from my checking to savings. When you set it and forget it you won’t miss it!
- Check Your Credit. Did you know that you are entitled to a free credit report every year? You have to pay an additional fee to get your credit score but the report will at least let you know what your credit history looks like. Krissy and I turn it into a game so we don’t forget to check.
- Track Your Spending. Keeping track of what you spend isn’t that hard. I’ve been using Quicken for four years now, and there’s really great websites like Mint that help you track your bank and credit card accounts. It always helps to know what your are really spending your money on.
- Make Your Credit Work For You. If you have a credit card, make sure it’s at least working for you! There’s no reason why you aren’t using a card that is racking up reward points as you make purchases on the card. I use an American Express rewards card that gives me cash back every year.
- Right Size Your Insurance. When I had to man up and start buying my own car insurance, I opted for a higher deductible and made sure I wasn’t going overboard with my coverage. By making opting for the higher deductible and the just right amount of coverage I was able to lower my overall premium.
While I am relatively savvy about some personal finance things, I don’t know everything. Here are five things I need to figure out.
- How To Manage My 401k. Sure I’m stashing my money into a 401k but I don’t know if my current allocations are cool if I should change it up.
- Student Loans. I have been fortunate enough to be debt-free thanks to my college scholarship and my supportive parents. That being said I want to go to Grad School this fall and I need to sit down and think more about who I’m going to pay for this thing.
- Flex Spending. At first I didn’t think I had enough reoccurring medical related costs to justify throwing money in an FSA but maybe I do. I do buy contacts every year and I have certain prescriptions I take…
- Renter’s Insurance. I first heard about it when Rebecca was renting a place two years ago and it’s something I should really bring up with the roommates.
- Stocks. Besides my retirement savings, it would be cool to understand stocks a little bit more- maybe I could clean up like Michael Douglas.
How are you when it comes to personal finances? What online resources do you find helpful when it comes to money?