In school, students don’t usually get taught about Financial Literacy. Until this day many millennials don’t really understand Financial Literacy. They don’t understand the concepts of what amount of your check you need to save. How much money do you need to invest yearly? What leads to debt? Some of these topics are fundamental in everyday life.
- In the USA about 66% of Americans don’t know the basics of Financial Literacy. As a young adult it will be fundamental to know these things. Especially when you are in college.
- It is important to know Financial Literacy in college because it gives you an understanding on how to manage and pay off your college debt.
- Without getting more debt or having financial problems.
In addition, with knowledge of Financial Literacy you get to use your credit card properly.
- By properly I mean built more credit score instead of debt. Not using more money in the card than what you have in the bank.
- Be able to properly pay the monthly subscription for the credit card.
- Never miss a payment with an item you paid in the credit card.
Furthermore, Financial Literacy is important because you need to know how to distribute your check.
- For example, 15% of your check should go to retirement. You can retire by the age of 65.
- 50% of the check goes to expenses like bills, food and gas.
- 5% goes to savings
- At least 10% of your check should go to investing.
In addition, you should always check on what you spend. The bank gives you a list of the items and things you spend a month on.
- You should never spend more than what you make.
- Always set a budget.
- Compare prices to see what items you can get more affordable in other places.
- Set a goal on how much money you want to spend that month.
Furthermore, you should also learn about retirement plans which is a topic in Financial Literacy.
- The first one is a 401K.A 401k is a retirement plan and investing plan the employer offers. Usually employers take 1-2% of your check and put it there.
- Then we have Roth IRA. This is an individual retirement account.
In conclusion, young people should know about Financial Literacy because it will become a key component in their adulthood. It is essential because you need to know how to manage your college debt. So, you can pay it off correctly without getting into financial problems. You also need to know how to distribute your check properly and budget. In addition, you need to have a retirement plan so you have a great amount of money to live well off when you are retired.