Studies show that most high schoolers are graduating with almost no financial education. When you sit down and think about it, that’s pretty scary stuff scary: While most kids learn the basics of physics and geometry, they aren’t coming out of high school having had basic money lessons like managing a household budget, investing, and setting up a savings account. No wonder most millennials don’t even have a $1,000 emergency fund.
Whether you are moving on to college, working, or off to attend a trade school, here are the key money lessons to master sooner rather than later. And for those who are a little past high school graduation age, it’s never too late!
1. Track your spending
You probably already have a bank account, but are you tracking your spending? Like really taking a deep dive into where your money goes each month? Whether you are off to college or about to living on your own, life is about to get real. If you haven’t made it a habit already, it’s time to start logging onto your bank account and keeping track of exactly where your money is going just as much as you keep up with Kim Kardashian on Instagram.
2. Make a budget and stick to it
Make sure you know exactly how much money you are bringing in each month, how much needs to go out for necessities, and then budget for variable costs like food and entertainment. It’s officially time to itemize and manage your income, expenses and savings. If you actually create a budget and stick to it, you’ll be surprised by just how easy it is to stay on top of your finances.
3. Checking and savings accounts aren’t the same things
One of the most important things you can do post-graduation is to start saving in order to set up an emergency fund so you are more financially secure. One of the easiest ways to do just that is with Digit, which automatically moves money to your savings account based on your spending habits, that way you can easily start saving without even realizing it!
4. You don’t have to have a lot of money to start investing
Many people think it takes thousands to start investing, when in reality, you can start today with the spare few dollars in your pocket. For instance, you can invest in stocks, even for as little as $5 with the Stash app so you don’t miss out on the next Amazon. You can also use Stash to buy fractional shares of Exchange-Traded Funds (ETFs).
5. Only spend what you have
How many times have your parents given you this piece of advice, but it is so easy to fall into the trap of spending more than you have when you have a credit card. For money beginners, you really can’t be too careful. Use cash to control your spending or sign up for Debitize which will help you track your spending and deduct money from your checking account whenever you make a transaction on your credit card, thereby making sure you don’t spend more than you have each month. Plus, you’ll end up with credit card rewards which can be great to put towards travel.
6. It’s never to early to start saving for retirement
It can be hard when you are young to jump to thinking about retirement, but the earlier you start, the easier it’s going to be. Every little bit helps, and by starting early you are going to get a big leg up when it comes to compound interest. Think of it like this: A little bit now is going to help you a heck of a lot later.
7. The little things seriously add up
What gets most people off track when it comes to budgeting and saving isn’t the big things they’ve been planning for like a car or an airline ticket, it’s the little things like daily lattes, drinks out on the weekend, and ordering takeout every night. Make a plan to wean yourself off the little splurges, and you’ll gain big.
8. You’re the only one looking out for your financial best interests now
It’s a hard truth to take in, but the sooner you realize it, the better: after high school you are in charge of your finances, period. Sure mom and dad are around for advice (they might even still be helping you), but it’s up to you to seize the reigns. Your future depends on it.
Illustration: Laura Caseley For The Money Manual