April is Financial Literacy Month! Last week I watched a video that Budget Girl posted on YouTube called 5 Things I Wished I had Learned in High School. I loved the concept, so I wrote a similar post here sharing the money lessons I wish I had learned in high school.
1. How to budget your money for what matters most to you
My high school had an accounting course I could have taken. But, I didn’t because I thought it looked boring. Which is funny because I ended up majoring in accounting in college. Even though I graduated with an accounting degree, I didn’t learn to budget in college either. College accounting courses don’t teach you how to manage your personal finances. People assume that if someone is an accountant then they are good at managing their own money. This isn’t always the case.
It wasn’t until I started using You Need a Budget that the concept of budgeting even clicked with me. That’s when I felt like I had permission to spend and save my money based on what I valued most.
If it was up to me, all high school seniors would take a basic personal finance class. It is so important to know how much money you make and where it goes each month. If you want to start achieving your financial goals, then align your budgeting decisions with what you actually want in life.
Budgeting doesn’t have to be difficult. I like to follow a simple form of budgeting.
We make sure we can cover our basic living expenses and then we fund our savings goals.
2. Living within your means is powerful
Recently someone stole my debit card number and used it to make nine Uber charges on my account that day. Nice. Before I could cancel my card, I was out almost $300. We had enough money in our checking account to handle this, so it was not that big of a deal. I had to fill out some paperwork at my local branch, make a call and two weeks later we got a refund.
I did think about what a horror it would have been if we didn’t have the money to cover those fraudulent charges. Without an emergency fund to cover the charges, we would have been living in a nightmare.
Having an emergency fund prevents a small unexpected financial hit from turning into a major ordeal. Studies show that about 46% of Americans don’t have enough money to cover a $400 emergency.
Living within your means is a decision that you have to make over and over again as you earn money. This may seem basic, but it is life changing.
3. Working for someone else isn’t the only option
Graduate high school. Go to college. Get a good job. This was the career path that our school taught as the only way to earn a living as an adult. I didn’t learn about ways to make an income beyond being someone else’s employee.
Freelancing, side hustling, and starting your own business weren’t topics that were taught in our high school courses. I guess it’s fair to say that economy has changed a lot since I was in high school. Today freelancing is becoming more the norm. In fact, studies estimate that by 2020, 50% of the workforce will have freelance positions. Right on.
People often believe that working for someone else is a more secure career choice than working for yourself. This isn’t always true. The truth of the matter is, layoffs, downsizing, and company closures happen all the time.
Having multiple streams of income is a great way to protect yourself from fully relying on one source of income to sustain you.
I think we should teach high school students that there are other great alternatives besides just going to college and getting a job working as someone else’s employee. Student loan debt is on the rise and new graduates are often struggling to find employment upon graduation. Going to college doesn’t automatically guarantee that someone will have a successful career and earn a high income.
4. Debt is much worse than you think it is
I’ll say it. Debt stinks.
If you’re working hard and still feel like you aren’t moving forward financially, your debt could be to blame. I was listening to Listen Money Matters the other day and they talked about how “debt is like driving with your foot on the brake.”
As you try to move forward financially, your debt will continually stop you and hold you back.
Just this week, I mailed a check to EdFinancial which paid off my student loan. It felt great to get that out of our lives. Our family now only has two debts left. My husband’s student loan and our mortgage. Since my student loan is gone, we have an extra $74.68 a month in our budget. It doesn’t seem like much, but it is a small raise that we can now use to fund other goals.
When our family had a car payment, a credit card payment, and my student loan payment, it always felt like we were never moving ahead.
Every time we tried to move forward, our debt held us back.
Taking on debt is not a decision that should be taken lightly. We are doing high schoolers a disservice if we teach them that taking on credit card debt or student loan debt is no big deal.
5. You have the ability to change your financial life
If you’re willing to work hard enough, you can fix any financial mess you find yourself in. You have a lot more control and power over your financial life than you think that you do. I say this because I used to be in the mindset that everything was out of my control when it came to our finances. It was a negative and unhealthy place to live from.
When we were struggling with credit card debt, I used to tell myself that there was nothing we could do to pay it off. When I stopped my negative thinking and decided to work a plan to get rid of off our credit card, then we did. I stopped complaining about our mess and cleaned it up.
How you live your life comes down to the day to day decisions that you make. If you want to live your dreams, then stop hesitating and take action. If you don’t feel like it, who cares. Do it anyways.
Taking action can change your financial situation around and get you to where you want to go.
Did you take a personal finance class in high school? What money lessons do you wish that you learned in school?