Graduation is coming up and soon hundreds of thousands of young adults will be released from the confines of high school and into the "real" world. Thinking back, there were many things I wish I'd known as a new graduate that weren't covered in school. Among those things:
How to use a credit card. Generally around your 18th birthday (the time when you can sign a legally binding contract), your mailbox becomes flooded with credit card offers. Instead of accepting every credit card offer that came my way and promptly maxing them out which lead to years of debt, I wish I had accepted only one credit card and used it to make small purchases that I would have paid off monthly. Responsible credit use builds your credit score and keeps you out of perma-debt.
It's worth the work to both keep your grades in tip-top shape and apply for as many scholarships as possible. College graduates earn much more over their lifetime than high school graduates. The way to get a college education without paying off student loans for the rest of your natural life is two-fold. First, keep up your grades, test scores and school/community activities. It's worth all of the effort when it comes to getting into a good college and getting financial aid. Second, apply for any and every scholarship possible; it's much better to let a variety of generous scholarships pay your college costs than you and your parents. Free money is good.
Delayed gratification is also good. Although we live in a "gotta have it now" society, considering all of the ramifications of your actions and delaying gratification is a good thing for both now and your future. Before I even graduated, I wanted to be an adult. I bought a car at the age of 16 (which meant car payments, insurance, upkeep, etc.), rented an apartment the minute I turned 18 (along with that came bills for utilities, groceries, etc.), and started hanging out with an adult crowd, skipping the end of high school/college social experience all together. Lesson learned: there is plenty of time to be an adult. Don't burden yourself with monthly bills, the responsibility of full time work, furniture that would take a good-sized U-Haul to move and all of the others parts of adulthood that leaves no "out" in case you want to head off and travel, go to college out of state or kick back on a beach somewhere.
Working full time, especially at a good paying job, isn't always a good thing. This, more than anything, has a way of curtailing the experimentation phase of young adulthood. Pretty soon you start chasing the money and forget about school or other training that can bring even more money and satisfaction in your future. You wonder why you are knocking yourself out at college when you are making good money now. Another down side is that young people with a lot of money have the opportunity to make some pretty huge mistakes. I can't count the number of people who got into drugs, alcohol, and fast cars with all of the ensuing problems that comes with that just because they could afford to.
I would have paid more attention to my parents and grandparents. The fact is that oldsters have a lot to teach if you hang around them long enough. There will come a time when you will wish you knew how to bargain shop like your mom, cook from scratch like grandma and build something/grow something like grandpa. Take advantage of these wonderful resources now.
Finally, I would have paid attention to the magic of compounding interest. Here's an example: if you are 20 years old and save $100 a month for 40 years at 5% interest you will have $152,207 when you are 60 years old. If you save the same amount but don't start until you are 40 years old, you will only have $41,663 when you are 60 years old. Saving a little every month makes much better financial sense then trying to catch up when you are older.
While everyone learns lessons the hard way, these are just a few of the ways that you can start out your life on a positive, financially successful foot.
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