I always say this, but the American schooling system has failed us and doesn’t teach us the things we need to get through life. We learn how to take tests and remember and regurgitate stuff on a piece of paper, and we are graded on this but aren’t taught the basics. We aren’t given the appropriate tools to get through life successfully.
Some of the things on our lists might seem like no-brainers, but some people aren’t aware of them, and this is why it is essential to educate people about money. So, without further ado, let’s dive into this blog and learn some of the things about money that we believe everyone should know or at least be aware of.
1. Diversify your income
Don’t put all your eggs in the same basket, and this is the motto to follow when you are investing in stocks or anything. If things or a company goes awry, you know that you have stocks in other companies that you can sell and make a profit on. So, by diversifying your incomes, you are making sure that you always stay ahead of the game.
Never put all your money on a single stock or single sector because if they crash, your finances will also go down; this is why successful investors diversify their income by investing in different companies and stocks.
2. Credit score
If you live in the United States, then this is something that you should be careful with. Credit scores are increasing more and more important, and you need to make sure yours is in good health at all times. A good credit score means that you have to pay less interest on loans and you are also more like to get said loan if you apply for it.
Because they determine the interest rate on the loan your payor will pay, it is important that you get free annual credit reports to make sure that you are on the right track. By doing this, you can check if there are any errors and ask them to make the necessary corrections.
3. Don’t spend more than you earn
If you follow this, you will never end up bankrupt, don’t overuse your credit card too much because you have to pay the money back with interest. At the end of the day, if you can’t pay it back, you will have a bad credit score, and this is not good.
Always consider your paycheck as your limit; if you don’t spend more than you earn, you will always come out on top. I know when you just ended college, you don’t really care about the future because you already have a ton of student debt, but you don’t want to increase that burden.
Always use your credit card as a last option and always back it back on time to keep your credit score in the net positive. This is a good way to keep yourself afloat in life.
4. Invest in a 401k
It is a retirement and investment plan that your employer sponsors. It allows you, the employee, a tax break on the money they contribute and will enable you to put aside a percentage of your pre-tax salary toward your retirement plan. The percentage allotted is directly deducted from the employee’s paycheck and is invested in your chosen fund.
You can choose where you invest your 401k from a select list of investments like stocks, bonds, and mutual funds. Most financial institutions advise you to invest the maximum amount in your 401k plan or as close to it each year as this will make your retirement plan heftier.
As most of us do, if you like free money, you should invest in a 401k if your employer provides it. Most employers offer to match their employees’ contributions to their investments. That is, they either invest a dollar for every dollar you invest or 50 cents for every dollar you invest.
This means if you invest $8000 a year in your 401k plan, and your employer provides an additional 50% of your investment, that means you are gaining $4000 for free. If that is not an incentive to open a 401k account, I don’t know what is.
5. Start saving early
Some people believe that we are here for a fun time, not a long time, and that’s fine because I have the same motto. But for the people out there who want a family and all the things that go with it, then you ought to start saving right now. The earlier you begin to save for the future, the more money you will have when you retire.
Put the money in a savings account, and you will get a cashback on the amount you invested each money; if you ask us, this is a win-win situation. More people should start investing now, especially if they want to have a family and own a home in the future.
Sound off in the comments section below and tell us if you want to read more about money and tell us what you want to read next.