Dollars and Sense: Tips to Get Started

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Dollars and Sense: Tips to Get Started

Good money management skills start when you're young and last a lifetime. If you don't yet have a money management plan in place, here are a few tips to get you started:

Set up a budget and stick to it.

Creating a budget is nothing more than simple math. Total up your monthly expenses (like your cell phone bill) and subtract them from the money you bring in every month (after you've already put a portion in the bank). The amount leftover is what you can spend on the fun things in life.

And if there's nothing left over this month? You'll need to cut back somewhere until you have extra in the budget again. A sensible budget is flexible.

With a solid budget in place, money is one less thing to worry about.

Don't spend more than you have.

No matter what your financial situation is, the key to good money management is always the same: Don't spend more than you have. Easy enough? If you're like most people, it's not easy at all.

Spending more than you have is an expensive habit. Overdraft fees and penalty fees can add up quickly. And you may end up in a hole that will take years to dig out of. Don't do it.

The best time to prevent debt is before you buy.

Create a savings plan.

Most people agree that saving is a good thing, but they find it difficult to do.

One easy way to save is to pay yourself first. Whenever you receive a paycheck or other money (like that check grandma sends for your birthday), put a portion of it directly into the bank. If you never see the money, you won't miss it. And before you know it, you'll have a nice nest egg set aside.

Make savings a top priority.

Pay your bills on time.

A simple way to achieve financial success is to pay all of your bills on time (although you may not have a lot of bills yet!). Late payments can lead to costly penalties and may wreak havoc on your credit score, which will be important when you're no longer dependent on mom and dad.

If you just can't seem to make a payment by the due date each month, check to see if you can set up automatic debit. With automatic debit, you'll never miss a due date again.

Even one missed payment will stay on your credit report for 7 years!

Know your credit score.

Having a good credit score (generally around 700) is of benefit if you ever want to buy a car, get loans for school, or even get a cell phone.

Check your credit report once every 12 months at It's free, although they may charge you a fee for your actual credit score.

Your credit score shows how responsible you are with money.

If you get a credit card, be responsible.

In the United States, you must be 21 years old to get a credit card in your own name, unless you have a co-signer. If you do get a credit card, be careful. Never charge more than you can afford to pay in full that month. By paying your bill in full, you'll avoid paying interest on purchases.

If you find yourself unable to pay your bill, immediately stop using your credit card. Every transaction, every payment, every missed payment is noted in your credit report.

Consider using a debit card instead of a credit card. A debit card allows you to pay for purchases using money from your checking or savings account. This will help you to avoid overspending and prevent you from racking up debt.

A credit card used wisely builds a positive credit history.

Have an emergency fund.

Set aside a portion of your savings to be used for emergencies only. Because you never know when your car is going to break down, you're going to suddenly find yourself without money, or one of life's other mishaps occurs.

Your emergency fund should consist of at least 3–6 months of expenses.

No excuses… EVERYONE needs an emergency fund.

Comparison shop.

In today's competitive market, many retailers are slashing prices and offering deep discounts. Take advantage of these savings opportunities and make sure you are paying the lowest rate available.

Compare prices online, or ask about available discounts before you buy anything. Specifically ask about student discounts, which may earn you additional price breaks.

Take your time and find the best deals available.

When in trouble, get help.

If you find yourself facing a money situation that you can't handle, get help before it gets any worse. The most important thing you can do in the short term is to stop spending. Don't add more to your debt.

Then talk to an adult, perhaps a parent or a school counselor, who can take a look at your situation and help you devise a financial plan.

Don't make a bad situation worse by doing nothing.

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