Money, Money, Money...we need it to live, to enjoy life and to take care of us in that crucial moment, after our working life when we choose it to be over, retirement. From the first moment we receive a cash gift to the moment we begin our journey into the working world many of us have no clue as to the inner workings of a "healthy financial future". Did you ever wonder why there has never been a subject in school to teach us personal finance? I have to admit I never really thought about this until I was in my mid-thirties and struggling with paycheck to paycheck debt and bills.
The very first time I was introduced to the subject of personal finance I was in my sophomore year of high school in 1987 and I found it to be quite fascinating. I learned about T bills and balances, how to write checks, in textbook and workbook forms of course, and even a very generic basis of how to do bookkeeping. Although the text was very informative, it was based on basic business principles for a business but not necessarily useful as personal finance. Fast forward twenty-four years later and although I have learned how to better manage my finances I still have a lot to learn. I want to share with you several basic tips to better personal finance and these are relatively basic concepts that with better information and time as well as personal stake and work you can achieve in a much shorter time period than I did. I will add more links to resources and forms as often as possible.
Let's begin shall we?
$avings and Checking accounts: Just a quick note as to the difference between the two-a savings account is used exactly for what the name proposes-Savings. A checking account is used for your most important daily expenses such as bills, grocery and the like. It doesn't matter how much you currently make always challenge yourself to save as much and as often as possible. As you begin to make more money, you can always add more to your savings or start up a new savings account at another bank. Whenever possible always check your local credit unions to find the best going interest rates for your money. Right now the rates at local credit unions are looking better and better. You may want to also check online banks such as
ING Direct and the like. The more you push yourself to save the better you will become at reigning in those dollars you may find yourself parting with on a weekly or monthly basis.
Budgeting: The most important part of self-discipline when it comes to your money is to keep a monthly budget. This is very crucial to your financial well-being if you want to become financially independent. In this step if its easier for you, start off with a weekly budget this will help you find your outgoing expenses versus your incoming amounts. But if you're a monthly type of person here is an excellent form you can use to see your expenses every month;
Get Buttoned Up. Don't forget to add those taxable items into this form to help with your yearly tax gathering of information. It comes in really handy. Here is also a really user-friendly website I came across recently to help me with those stray receipts I often keep but never did anything with, it has really helped me gauge where I was spending money everyday -
The Birdy. It has become my best friend in personal finance for the last three months.
Money Market acount: I'm fairly new to this area of finance but I initially opened an account with $75 dollars and have been saving and adding to this amount every year since. I actually put my money in direct deposit mode and haven't touched it since. Although the progress has been slow it has been great just to watch it grow over time, also called compound interest. As long as I don't touch it I can let it grow and by the time I need it I should have more than enough money to retire on. It helps even more when I add more to my current savings amount, i.e. In my first year I began this savings with $75.00(after-tax money) bi-weekly, by my second year I increased the amount by $25 dollars so I was saving $100.00 bi-weekly and so on. It really is do able. Check out:
TDAmeritrade initially the information may sound confusing but trust me, just sign up and if you're not yet comfortable just read their newsletter for further information. Even if you don't go with this company any bank of your choosing provides money market accounts. The more information you read on this subject the better you become at making a more knowledgable decision for yourself
So back to my initial question as to why personal finance has not become a part of the American School System curricula. I have my own opinion but I'd rather keep it clean here. I believe if all of us who have ever struggled with bills, dead-end jobs, paychecks to paychecks, and all the like, if we demanded that the entire school system begin to incorporate it into a daily or weekly curriculum then I can envision that happening. Just as I can envision a new generation of children being even better prepared to survive this crazy world of credit and bankruptcy.
On the other hand, who better to teach our own families and children the ins and outs of finance than those of us who watched our parents before us struggle and didn't know how to teach us. I began what I now feel is a life-long learning of finance by reading as many financial books and magazines as I can get my hands on. Money magazine is by far my most read magazine in my home.
For now I hope I have lightened someone with a bit of personal finance information and I will update as frequently and as often as possible.
