It is hard to believe, but most high schoolers getting ready to graduate do not know how to open a bank account or apply for credit of any kind. In fact, the knowledge gap is so big that it’s not uncommon for those getting ready to head off to college and have no idea to create a budget. Another problem is that budgeting is often regarded as a difficult and tedious task. Sure, it is a responsibility, but budgeting is not as complex as people make it out to be. If you are looking to get a good grasp on your finances, then you have come to the best place. Here are a few smart money tips for beginners.
Figure Out a Budgeting Method
The very first rule of getting a better grasp on your finances is to make a budget. We already went over how people think it is difficult, so now we’re going get into the why. The reason why many have such a hard time finding ways to save money and budgeting is because they’re not organized with it. A budget must have balance before it’s effective. Finding a balance in your budget is simple by using a specific method. One such method includes the 50/30/20 method. This is when you take 50 percent of your income and fund the most important expenses, like rent and groceries. Afterwards, you can put 30 percent towards whatever you want while the remaining 20 percent goes into savings. There is another method called the 70/20/10 method, which functions almost the same way as the other. It is ultimately up to you to how you want to structure your budget.
Apply for a Credit Card
Financial security is not all about savings; it is about how much you must sustain your lifestyle. Sure, it is very important that you save every cent you can, but the process is slow-going. This is why many opt for procuring alternate means of financing. One of the most common ways to do so is applying for a credit card. Since you are a college student, you can apply for a student credit card instead of a traditional one. Student credit cards work the same exact way any other credit card does. You get a certain amount you’re allowed to spend and must pay it back on time. However, student credit cards can come with a zero percent interest rate, which makes it easier to pay back everything you spend. In fact, interest rates are one of the main reasons why people have such a hard time budgeting. They can increase when you least expect them to.
Get a Cosigner on Your Student Loans
College is known for being unforgivably expensive. You’re going into thousands worth of debt in such a short amount of time. What is more is that if you are applying for the first time, you may not get accepted as you do not meet the requirements. This is why you should consider getting a cosigner. A cosigner is an individual who agrees to share the responsibility of paying back your student loan debt in case you’re unable to. If you have the right person behind you, like your parent, having a cosigner can do wonders for your confidence and morale. You would be amazed at how common cosigning really is. Many new college students do not have enough credit built up nor do they have necessary finances to afford the degree outright.
Think About Your Retirement
You may be building your career now, but that does not mean you should put retirement on the backburner. If anything, now is the perfect time to start saving for it. The earlier you start saving, the more you will have to spend during your golden years. When you start looking for a position, see what their benefits package offers. Some of them offer 401Ks and IRAs. Ideally, you want a 401K as they have a higher contribution limit. Company-sponsored 401Ks will also match your contributions, which adds even more to your retirement savings.