Graduating from high school or college is a momentous occasion in your life. It signals the end of childhood and a steady transition into adulthood, which comes with it many responsibilities. For instance, it is now your responsibility to pay your own bills and otherwise manage your own finances. Here’s a piece of financial advice for graduating seniors that can help you be fiscally responsible as an adult.
Learn the Magic of Compound Interest
If you invested $100 today and left it in the stock market, you could potentially have $3,000 in 50 years. This happens because interest on your money compounds each year that you allow it to accrue. Therefore, you should start saving for retirement or other future goals today even if you only have a few dollars to invest each week or each month.
Use Credit Cards to Your Advantage
You may think that paying for items in cash is the most responsible way to manage your money. However, it may be better to put a purchase on a credit card and then pay the balance off at the end of the month. Doing so allows you to establish good credit, as well as take advantage of cash back, airline miles, and other perks that can help you save money on goods or services that you may want or need in the future.
Understand Price Vs. Value
Fiscally responsible individuals know that price is what you pay for something while value what you ultimately get. Therefore, it may not be in your best interest to buy something simply because of the brand name attached to it or because you want the newest phone before your friends get it. It is almost always less expensive in the long run to look for quality products that will last for as long as you want or need them to.
You Don’t Have to Know It All
If you have questions about your money, don’t be afraid to ask. There are dozens of blogs, classes offered at community colleges and seminars available to explain financial concepts and to answer any questions that you may have. Talking to and listening to financial experts may give you insights into how you can better manage your money and maximize the return on every dollar that you invest.
Don’t Underestimate a Quality Insurance Policy
A good auto, home and life insurance policy can protect the investment that you have made in your car or house. You should also look into health insurance as the ability to see a doctor or have routine dental work done may prevent a minor issue from becoming a complicated and expensive one in the future. If you choose to start your own business, a business liability insurance policy may be worth paying for as well.
As a graduating senior, you are going to be exposed to the working world for the first time. While you may make some mistakes with your money as you learn how to manage your finances, it is important that you learn from those mistakes. Remember, if you have any questions about money, feel free to talk to your parents or a financial adviser.
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