Advertising
Advertising

4 Crucial Financial Lessons College Isn’t Teaching Millennials

4 Crucial Financial Lessons College Isn’t Teaching Millennials

Out of all the reasons that people go to college it seems that two tend to top the list: the love and pursuit of knowledge and a means of upward financial mobility. For institutions so concerned with knowledge and money, you’d think that most graduating students would know all there is to know about their own personal finances, venturing into the world well-equipped to become productive members of society, and get a solid grasp on this “adulting” business. Unfortunately, the numbers don’t seem to reflect as much.

As it sits only 17 states currently require students to take a course in personal finance sometime in K-12 and according to one study, 43 percent of students couldn’t name one difference between a credit and a debit card. With how important tax returns, credit scores, and all other sorts of financial data are to the average adult’s fiscal life, it seems absurd that so many come out of college knowing so little about them. Whether you’re intent on amassing a small fortune or content with living simply and frugally, there are certain financial lessons you shouldn’t leave college without knowing.

Advertising

1. No Matter What, You Have to Pay Your Taxes

tax-consultant-1249530_960_720
    For some people, the fact that you have to pay taxes is a no-brainer–personally, I’ve had to fill out tax returns since I was about 16 years old. However, many of the people I went to college with–particularly athletes and high-performing academics who’d never had the time to hold a job throughout either high school or university–hadn’t the slightest clue about 1040s or 1099s or any of the other tax forms that income-generating Americans should.

    The good news is this: taxes usually aren’t as complicated as people make them out to be. They can be, but at the end of the year, the average citizen will be filling out a 1040EZ which has line-by-line instructions (in fact most tax forms come with a set of instructions). Difficult or not, taxes are time consuming. The Motley Fool estimates that it takes 5 hours for the average 1040EZ filer, so make sure you set that time aside and get it done. Owing the government money is never a good thing. Another reason that tax awareness is as important today as it ever was is that more graduates are going into business for themselves, either as business owners or as part of the gig economy. Without knowledge of the tax code, how do you avoid running afoul of it and owing the government money? Unfortunately, not knowing the rules doesn’t make you exempt from them, so brush up on your tax knowledge. The more you know, the better prepared you’ll be.

    2. Your Credit Score is Probably More Important than You Realize

    3446025121_072700607f_b
      From car loans to home loans, finances are a huge part of everybody’s lives

      Credit scores were invented shortly after the Civil War to indicate how trustworthy a person is in terms of paying back debt, and everybody–unless they’ve never opened a bank account, applied for a loan, or owned a credit card–has one. Your credit score is going to range anywhere from 300 to 850, and the lower the number is, the less likely that somebody will trust you with their money. The higher your credit score, the better chance you’ll get a good deal on your mortgage, car loan, and basically any other major life purchase you might be thinking about. On the other hand, if your credit score is too low, you may be flat-out denied a loan.

      Advertising

      A better credit score means you have more buying power, but more importantly that you’ll have to pay less interest on those big life-purchases (more on that in a moment). The weird thing here is that you have to use credit to build credit–a slippery slope if I ever saw one myself–and it’s easy to get carried away with all of that unchecked power. It’s good to keep in mind that you’ll build credit quicker by managing your debt more strictly; keeping your credit balance below 30 percent of your credit limit is recommended for building credit. It’s all about balance!

      3. Debt Compounds Quickly–So Pay It Off Just as Quickly

      7658205070_cb49629afd_b
        You wouldn’t just hand over money would? Only paying the your minimum amount on your installments can cost you big in the long run.

        This is one of those things that I wish I would have realized sooner. Due to rising costs of tuition ($19,548 per year on average for in-state tuition including room and board), many students are taking on massive amounts of debt with the hope that they’ll land a good enough job to pay it all off later. Unfortunately, many of these students take on that debt without fully realizing how debt and interest actually work. Whether it’s credit cards, student loans, or your car payments, it’s almost always worth it to pay off your principle sooner rather than later. Here’s a quick example to illustrate what I mean:

        Advertising

        Let’s say your loan balance is $40,000 at last year’s current average interest rate of 4.29%. You’d have to pay at least $410.52 a month consistently to pay your loan off in 10 years, and you’d still be paying $9,261 extra in interest–meaning your $40,000 worth of debt is closer to $50,000 when it’s all said and done. If you commit to paying off an extra $100 a month, you’ll save approximately $2,200 overall and pay off the loan in 7.8 years. Bump that up to an extra $200 a month and you’re looking at being debt-free in 6.3 years and saving approximately $3,600 on interest charges. It’s worth noting that certain loans, specifically mortgages, may have penalties associated with paying them off early–however, the overarching lesson is this: if you can pay it off early, do it! You’ll thank yourself later on. Seriously.

        4. It’s Never Too Early to Save for Later

        credit-squeeze-522549_960_720
          Sometimes money is too easy to spend–keep that wallet shut and save!

          Of course, the reason that we take so long to pay off our student loans and other debts is that we’re a culture focused on living in the now. We’re not great at recognizing our future needs over our current needs, and add to that economic strains and pressures and you see why young folks like Millennials put off saving for retirement, let alone drawing up a will or living trust. Beyond taxes and debt, this is probably going to be the least of most students’ concerns–but if there’s anything I’ve learned personally from paying off debt, it’s that it’s easy to underestimate how appreciative your future self will be for the actions of your past self. Any amount put away is better than nothing and will make your later years that much more comfortable.

          Advertising

          Of course, there are more obscure things that college students might want to know about finances, and this list is by no means definitive–but the lack of rhetoric in high school and university concerning the financial aspects of everyday life is somewhat concerning. At least here you’ve learned the basics, and can take fiscal agency over your own life.

          Featured photo credit: Pixabay via pixabay.com

          More by this author

          Andrew Heikkila

          Owner-Operator of Earthlings Entertainmnet

          5 Crazy Future Tech Trends to Start Preparing for Now Understanding Luck: What It Is and How to Control It 12 Strange Remedies for Whatever Ails You 7 Ways the Internet of Things Will Change Driving Forever 7 Ways We’re Slowly Becoming Our Phones

          Trending in Money

          130 Fun Things You Can Do This Summer Without Spending Much 235 Real Ways to Actually Make Money Online 3How to Make Money with a Blog (According to 23 Successful Bloggers) 4This List of 50 Low-cost Hobbies Will Excite You 530 Fun Things To Do With Your Friends Without Spending Much

          Read Next

          Advertising
          Advertising

          Last Updated on August 15, 2018

          30 Fun Things You Can Do This Summer Without Spending Much

          30 Fun Things You Can Do This Summer Without Spending Much

          Summertime can be a real strain on your wallet. The sun is out, there are people to see, places to be; it’s no wonder you might be short of funds during these sunny months. Not everything has to cost you an arm and a leg.

          Take some time to go through this list of 20 cheap summer activities and make some realistic goals to complete as many as you can.

          Video Summary

          1. Visit a strawberry festival

          Summer is prime time for tasting strawberries. More often than not, an area that grows strawberries will have a strawberry festival. Indulge yourself in strawberry pies, jams, cakes and more!

          2. Have a picnic

          Take your partner or your family to the local park and enjoy a relaxing picnic. Designate each person to bring one food item of their choice to add to the fun.

          3. Camp in your back yard

            The summer heat can sometimes make it hard to sleep. Why not enjoy the heat outside in the yard? Pitch a tent or gaze into the night sky.

            4. Take long walks

            Discover something new where you live. Take the afternoon off from your chores and go for a long walk. You may be surprised by what you discover.

            5. Break a world record

            Breaking a world record doesn’t have to be time-consuming. You could even break one on your lunch hour. Give it a go!

            Advertising

            6. Go on a bike ride

            The number of bike paths on roads in big cities has increased dramatically over the years. Take advantage, and enjoy the summer breeze.

            7. Join a gym class

              The gym is not everyone’s idea of a good time, but why not go with a friend a join a class? Spinning, yoga and step classes are always more fun with friends, and a lot of gyms allow you to pay-as-you-go.

              8. Find a new hobby

              The summer is the perfect time to find a new hobby. Serotonin (our body’s natural “happy” hormone) is produced by the sunshine and will be at a yearly high, which is great for when we want to tackle something new.

              9. Join a sports team

              Not all sports teams are competitive and require huge amounts of your time. Join in the fun with like-minded people, get fit, stay healthy and make some friends along the way.

              10. Make a slip ‘n slide

                Gather your friends, some plastic sheeting, a hose, washing up liquid if desired, and make a huge slip ‘n slide just like these guys. Granted, yours won’t be as big, but you get the idea… it’s fun!

                11. Make a treasure hunt for your kids

                Today’s digital world sees our children more often than not playing inside than outside. Why not create a sense of adventure by making a treasure hunt? Only rule? It has to be outside.

                Advertising

                12. Visit a free festival

                Towns and cities are awash with free festivals, with themes from film to science. Scout your local area and discover something new.

                13. Visit the zoo

                  Let’s face it: we love animals. While browsing news websites and social media networks you’re bound to come across a few pictures of cats. Take a trip to your local zoo for a better experience.

                  14. Take a road trip

                  Enjoy the open road with a few friends and take a road trip somewhere–anywhere. Just go out and enjoy the sunshine!

                  15. Play ultimate frisbee in the park

                    Frisbee is always great fun down the park, but why not turn it into more of a competitive sport by playing ultimate frisbee?

                    16. Make your own ice cream

                    Ice cream is a very versatile dessert. Make a sandwich, enjoy a cone, or simply just enjoy a bowl full. Better yet, making your own ice cream allows you to create any flavor you want.

                    17. Invite your neighbors over for a BBQ

                    Advertising

                      When was the last time you invited your neighbors over? Do you even know them? Now’s your chance. Just ask each person to bring a food item so costs don’t mount up for you.

                      18. Get a summer job

                      For many students, summer is the time for relaxation and fun. But who said earning money and being productive isn’t fun? You only get out what you put into a situation.

                      19. Attend a charity event

                      Attending a charity event is a great way to raise funds and awareness for a cause, meet new people, and generally have a good time. Search for your local charity event today.

                      20. Visit a national park

                      National parks are a great way to explore nature and learn something new. You could even volunteer and make a difference in helping restore natural habitats.

                      21. Visit your local comedy club

                        Local comedy clubs are extremely underrated. They are cheap to attend and no doubt you’ll have a barrel of laughs.

                        22. Make your own hammock

                          Hammocks are very relaxing, are perfect for summer afternoons and are surprisingly easy to make.

                          Advertising

                          23. Read in your new hammock

                          Now you have your very own hammock, the only thing left to do is enjoy it. Grab your favorite book and read to your heart’s content.

                          24. Watch a movie outside

                          Movies are great. Relaxing outside in the evening is great. Put them together and you’ve got a perfect combination. In D.C, Maryland and Virginia this summer, for example, you can enjoy a huge number of movies outside.

                          25. Take a hike

                            Hikes are a great way to keep fit and see more of Mother Nature. There are countless trails available for you to explore. Why not try some this summer?

                            26. Learn how to fly a kite

                            As a child, you probably had a kite and haven’t touched it since. Why not dust it off and attempt to fly it? It’s tricky, but well worth the challenge.

                            27. Work out at the park

                            American cities are full of parks with ample space for a work out session. No doubt you’ll be happier to work out in the sun rather than a crowded gym.

                            28. Take your dog to the beach

                              One of the many joys of owning a dog is taking him or her for long walks during the summertime. This joy is enhanced when visiting the beach, for both you and your dog.

                              29. Make a summer smoothie

                              Healthy, delicious and perfect for the summer. Not only that, there are countless recipes ready for you to try.

                              30. Attend a free yoga session at the beach

                              No experience needed and all skill levels are welcome. Take yourself and a buddy down to the beach and try some yoga. You’ve got nothing to lose!

                              Read Next