Top Ten Personal Finance Rules You Won’t Learn in School

Introduction

• Most people do not learn about essential personal finance skills in school.
• These skills are crucial for financial success.
• A list of ten important personal finance rules is presented.

10) Buying Your First Home

• Common advice: Save 20% of home value for down payment.
• Financial trade-off: Higher mortgage payments vs. waiting to save 20%.
• Real estate appreciation outpaces wage growth.
• Tip: If saving 20% in 5 years is unrealistic, consider smaller down payments.

9) Save, Save, Save

• Common advice: Save 10% of your income, but this isn’t enough to retire on.
• Better: Aim for 25-40% savings if possible.
• Build a savings habit and cut unnecessary expenses.
• Example: Save money spent on daily coffee.

8) Emergency Fund

• Schools don’t emphasize emergency funds.
• 40% of Americans can’t handle a $400 emergency.
• Tip: Save up six months' worth of expenses.

7) Budgeting Basics

• Budgeting is often unaddressed in schools.
• Lack of budgeting skills can cause hardships post-graduation.
• Essential: Plan finances to cover bills, groceries, and savings.
• Tactical Budgeting: Plan needs/wants over a six-month period, use separate accounts.

6) Compound Interest

• Compound interest is powerful but rarely discussed.
• Young people can benefit greatly due to the time factor.
• Example: A penny doubling every day for 30 days becomes $10 million.
• Tip: Invest early in high-interest accounts.

5) Secrets of Credit

• Young people often misuse credit cards, leading to debt.
• Importance: Good credit scores are crucial for loans and financial health.
• Tips:
  • Get a credit card to build credit history.
  • Always pay debts on time.

4) Rules of Insurance

• Life insurance: Important if someone depends on you financially.
• Other insurance: Cover assets like home, car, and health.
• Umbrella insurance: Can offer combined coverage and discounts.

3) Taxes

• Taxes are not well-covered in school curricula.
• Essential: Understand how taxes impact your income and pricing strategies.
• Tip: Use online calculators for tax estimation.
• Example: A $35,000 salary in NYC leaves about $26,399 after taxes.

2) Guard Your Health

• Medical emergencies can be expensive without insurance.
• Importance: Maintain good health habits to avoid medical costs.
• Tip: Get health insurance and live a healthy lifestyle.

1) College Debt isn’t 100% Necessary

• Student loans aren’t always necessary for a degree.
• Tips:
  • Look for colleges that help minimize debt, like Davidson College.
  • Consider part-time schooling, working while studying, or cheaper institutions.
  • Debt may be worth it in high-paying career paths.

Conclusion

• Reviewing these essential tips can help achieve financial success.
• Stay tuned for more finance videos and tips. Don’t forget to subscribe!