If there’s one thing that schools don’t teach you that they absolutely should, it’s how to handle your finances. Far too often people find themselves thrust out into the world with absolutely no idea what they’re doing and they are expected to wade through the murky, confusing financial waters of adult life without any preparation whatsoever. Well, don’t worry, because this short introduction to your own finances is here to teach you about some of the concepts that you’re going to need to learn now that you’ve been sent out into the world to make your fortune. You might not find yourself needing to think about every single one of them all of the time, but they are definitely going to be the kinds of things that you will be grateful that you knew about eventually. With that in mind, here are a few financial firsts that you might come up against.
Your credit score
If you really want to boil it down to its absolute simplest elements, your credit score is a numerical value placed on how much an organization trusts you with money. Your credit score is going to come into play when it comes time to rent or buy a property, buying a car, or taking out a loan. Your credit score is defined by how reliable you’ve been with money in the past. If you have unpaid debts from things like credit cards, then you’re going to have a… less than ideal credit score. But that doesn’t mean that you’re always stuck. It is possible to take out bad credit loans regardless of your credit score. And if you make sure to pay back the installments on that loan, you’ll actually be able to bring your credit rating up significantly.
Budgeting
When you’re living at home, it’s easy to think of your money purely as something that you use to have a good time and buy stuff that you want. When you get out into the adult world, it’s time to kiss that fantasy goodbye. The majority of your money will now go towards keeping a roof over your head and making sure that you don’t starve, freeze or end up with no clothes or shoes, whichever comes first. This means that it’s time to start thinking about budgeting your money. You need to make a careful note of exactly what money you have both coming in and going out. That way you’ll never get into a position where you’re spending more money than you actually have to spare.
Taxes
There’s a chance that just reading that word makes the hairs on the back of your neck stand on end. But don’t worry, taxes aren’t all that scary in reality, but they are a fact of life and something that you’re going to need to get used to. Taxes are simply a share of your income that you pay to the state to pay for things like schools, healthcare, and other public services. Think of it as you pitching in your little bit to help make the world function properly. If you’re employed, then your taxes will probably be taken straight out of your paycheck, but if you’re self-employed or working freelance then you’re going to need to submit your own tax returns. DO NOT FORGET TO DO THIS! If you do, you could get in some serious trouble with the taxman.
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