When young adults finish high school and head off to college, start working, or join the military, it is a crucial time for them to learn how to become financially independent and learn essential financial skills as a means of ensuring financial success as adults.
ACA International (Association of Credit & Collection Professionals) Chief Executive Officer Patrick Morris, said that “good financial habits begin early in life and can help ensure a sound financial future. Learning is a lifelong journey and we are never too young or old to start.”
There are seven key financial skills:
Maintain a budget – Good budgeting and spending habits are key to positive financial health. Be sure to create a budget and constantly check on how much you are spending.
Save your money – The sooner you open your own savings account the better.Put money into the account straight away and continue doing so regularly so that you build up a respectable nest egg. Take advantage of any retirement or 401 (k) plans that your employer may offer.
Be responsible – Credit cards, loans, and getting credit can seem very useful, but it is important to be extremely careful. You need to be very well disciplined to make sure that you pay your debts back in time.
Try to maintain a healthy debt level and always pay on time to improve your credit rating in case you need to borrow when you are older.
Understand credit – When receiving credit be sure to understand the ramifications of missing a payment, and get to know the ins and outs of what will give you a good credit score. Using a credit card properly can be beneficial to building a good credit score, which can help you get a mortgage for your home.
Communication – When you miss a payment it is crucial that you do not ignore the problem. Call the creditor or debt collector and try to work out a mutually beneficial agreement. Visit www.askdoctordebt.org for more information about how to work with a debt collector and plan a solution if you ever fall behind on your payments.
Be careful with your financial information – Be extremely careful about giving out personal financial information over the phone or the Internet – make sure they are established companies or financial professionals.
Monitor your accounts and report any unauthorized purchases to your bank straight away. Visit www.ftc.gov/idtheft for more information on what you should do if you think your identity has been stolen.
For more essential financial tips, be sure to look at CNN’s step by step guide to gaining control of your financial life.