Don’t click away. You are not at the wrong blog, despite the title that may leave you scratching your head. I’ve discussed finances previously in the context of how we handle finances with me being a SAHM, and have received requests for more money talk. I am no financial guru, but as David and I are pretty aware of our finances, consult experts like financial planners and CPAs and are very intentional in wanting to raise financially savvy kids, I thought it could make for an interesting topic to discuss here. Plus I know some of you ARE financial gurus and I’d love for you to weigh in!
With all the graduations happening this time of year, it reminded me that I graduated from college 10 years ago- say whaaa?! In that time I’ve learned a lot about handling money. David and I were chatting about it last night and discussing things we really want the girls to know and grasp before they go off to college one day. Luckily we have a few years before moving them into dorm rooms, but if they were leaving today, here are the values I’d like to instill in them.
Avoid the free pizza gimmick and other traps. David and I both remember seeing offers like this regularly on our respective campuses. A free pizza if you sign up for XYZ credit card. Or perhaps a $20 gift card if you roll your credit card over to XYZ company. These traps can get you sucked into financial messes early on and it’s best to avoid them. I think it’s a fine idea to get a credit card to start building credit, but research the options, pick one that fits your needs, stick with one and don’t treat it like free money.
Pay off credit card in full each month. Speaking of credit cards, don’t use it as a magical spending card. Don’t charge things you can’t afford and pay off your credit card balance in full each month. This doesn’t mean just the minimum payment. Paying the minimum only is what they want you to do so they can take advantage of their jacked up interest rates. Don’t fall victim to it.
Avoid debt and don’t buy things on payments. My goodness, there are some tempting offers out there. New furniture that you don’t have to pay a cent towards for two years? A shiny new car for no money down? Deals that are too good to be true usually are and it’s not difficult to get slowly strangled by monthly payments. Instead, save your dollars and buy what you need in cash.
Get comfortable not spending the same as your friends. Honestly, this one was a tough one for me personally. Eating out, buying a new dress, deciding where to go for spring break and choosing where to live were all decisions I had to make, but often found myself not at the same spending levels as friends. I learned to improvise and sometimes to just say no otherwise I’d pay for it (literally) when my monthly statement showed up in the mail.
Work. I got my first job at 15 and worked through college too and though I know some families prefer kids to just focus on academics as their job, working was really good for me. It gave me an appreciation of how much effort it can take to earn a buck and I was less likely to spend it all so quickly. I worked as the classifieds ad manager at UGA’s school newspaper, The Red & Black, and also as a waitress at Buffalo’s South West Cafe. A word of warning if you’re considering waitressing- I LOVED it for the record, but walking out with a wad of cash can also be more tempting to spend. Get it in the bank fast.
Borrow the least amount you can (or none at all) for college tuition and expenses. I went in-state to The University of Georgia. At the time the state offered a HOPE scholarship, meaning that as long as I kept my grades high, my tuition was covered. I remember thinking this was a good thing (because otherwise I would have to pay for it myself) but I don’t think I fully understood what a serious leg up it is to graduate without student loan debt until I was out of college. I have friends that 10+ years after graduation are still paying off debt and it will inhibit your ability to save. Instead of taking out a loan as your first option, search out scholarships, work to pay your way, consider your school selection and look for programs that offer incentives.
Focus on creating healthy financial habits. David came up with this tip and I really liked it. Being out on your own for the first time is like being at the very beginning of a marathon. In fact, heading off to college is like just tying up your laces. You’ve barely gotten started at this point, but starting to create good habits, like saving what you can, making and sticking to a budget, not going crazy with credit cards, etc will serve you well. It’s not so much that saving that $5 in college is going to be life changing, but the act of learning to save instead of spend frivolously certainly will be.
Take advantage of college resources. If there is one thing I could just kick myself for, it’s for not realizing what I had until it was gone. I loved college, but sold myself short on accessing all it really had to offer. Colleges are a gold mine for information. Sure, there is what you learn in class, but there are also so many extras like clubs, seminars, expert talks and more that are usually offered for free. Take full advantage of personal finance lectures, investing clubs, career counselors, networking opportunities and all the other wonderful resources at your finger tips.
Consider the financial implications of your major. Education is a funny thing. I think education is vitally important but going $100k in debt for a degree in basket weaving just doesn’t make financial sense. I don’t mean for this to discourage you from following your passion, but if your passion is going to lead you to a lower-income producing career, find a way to go about it that doesn’t put you in massive debt. This will actually allow you to continue following your passion through life without dealing with the crippling reality of having debt that eats your entire paycheck each month.
I’m fortunate that I grew up with financially savvy parents who taught me how to balance my check book, be responsible with money and always live within my means. I hope to do the same for my girls and encourage them to be smart and generous with their money. We are just starting to get into money with Hailey (I love Dave Ramsey’s concept of having three piles: save, spend, give), but that’s a post for another day.
What are you grateful you knew about finances as you graduated high school?
What do you wish you would have known/understood earlier?