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

Introduction

• Most people don’t learn essential personal finance skills in school.
• Personal finance is crucial for success.
• Important rules compiled by experts are outlined.

10) Buying Your First Home

• Traditional advice: save 20% of home value for down payment.
• Reality: Higher mortgage payments might be better than waiting to save 20% as real estate prices rise faster than wages.
• Rule: If you can save 20% comfortably within 5 years, do it. Otherwise, don't wait.

9) Save Save Save

• School advice: save 10% of your income.
• Reality: 10% isn’t enough to retire on unless you earn millions.
• Better practice: save 25-40% of your income.
• Start with 10% to build savings habit and reduce unnecessary costs.

08) Emergency Fund

• Emergency fund: Typically not taught in school.
• Statistic: 40% of Americans can’t cover a $400 emergency.
• Importance: Have at least six months of expenses saved, more if possible.

07) Budgeting Basics

• Budgeting is important but not taught in school.
• Poor knowledge leads to hardship post-graduation.
• Tactical budgeting: Create long-term budgets (e.g., 6 months) and allocate funds into different accounts to avoid overspending.

06) Compound Interest

• Key advantage for young people: time.
• Power of compound interest: Small chunks in high-interest accounts can grow substantially over time.
• Example: Choosing a penny doubling every day for 30 days leads to $10 million, as opposed to $3,000 upfront.

05) Secrets of Credit

• Mismanagement of credit: Common post-graduation, leading to debt.
• Importance of credit scores: Affects ability to get loans for homes, cars, businesses.
• Building credit: Get and manage a credit card responsibly.
• Timely debt repayment critical.

04) Rules of Insurance

• Life insurance essential if dependents rely financially on you.
• Term policies preferred over life policies.
• Other insurances: Car, home, assets, health, and umbrella insurance.
• Shop for best rates and features.

03) Taxes

• Broad and rarely discussed in school.
• Importance: Calculate taxes to determine take-home pay and appropriate pricing for businesses.
• Online calculators can help with tax calculations.
• Prepare own tax returns to avoid misinformation.

02) Guard Your Health

• Medical emergencies can be costly without insurance.
• Importance of health insurance: Protect against high medical bills.
• Maintain health: Healthy eating, regular exercise, and avoiding excessive alcohol/drugs.

01) College Debt isn’t 100% Necessary

• Student loans are not mandatory for a college degree.
• Different paths: Scholarships, part-time schooling, affordable institutions, working while studying, community college.
• Worth it in high-paying career paths but shouldn’t be default.

Conclusion

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