Most of us learned at least some economics in school. We maybe even picked up a bit of personal finance if we were lucky. Whether in class or just along the way, hopefully you’ve run into some of the everyday basics.
You should know the importance of budgeting each month, for example. You need to open up a checking account and a savings account to manage your money. Hopefully, you understand the importance of a rainy day emergency fund and the value of homeownership as a goal toward reaching financial security one day.
But there are a few additional basics in the world of finance that you need to know for the modern world.
Call this the New Finance 101 for 2020. These concepts aren’t quite as old as the bedrock principles that your parents grew up with. They are, however, just as important for today’s economy. And if you can come to understand these new finance basics — in simple terms — you will be able to manage your money and get ahead that much easier.
1. Money Has Gone Digital
Cash is barely even a thing anymore. The same goes for the days of pen and paper budgets. You need to move beyond the olden days and get with the program! If it has to do with money and finance, there’s an app for that. Really, these digital tools can be so powerful. Whether it’s about setting budgets, reviewing your investments, or tracking the market, you can find it online.
Mint is a great catchall management option for everyone. YNAB makes its goal clear (“You Need a Budget”), and EveryDollar offers many of the same functionalities. And these are just for starters. Dig in deep and explore all the best finance apps to find one that suits your needs best.
2. Credit Cards Are Powerful Tools
Speaking of the end of cash, you also need to make sure you have access to a good card. Maybe you like using your debit card day to day. A lot of people feel comfortable that way. But there really is a lot of value in making a credit card your primary purchasing tool. You need to pay if off each month — of course! — to be responsible. Don’t carry around debt that you’ll end up servicing for months or years to come.
But you need to recognize that the game has changed. The rewards — in the form of discounts, perks, cash back, and more — are so enticing. If you move most of your monthly purchases to the right type of credit card from a generous provider, you’ll be able to see some real results.
3. Seek Advice from Experts
There is one more secret that people today are willing to accept more than their parents: We don’t know it all. Sure, there is so much info out there. You might think you can watch a bunch of YouTube videos and become the next Warren Buffett or Dave Ramsey. While this is great — and you should soak up as much as possible — you also need to understand your limitations.
Don’t dive in too deep too fast. And don’t confuse your learning with expertise. So many young, eager, and well-meaning adults get out of college and decide they have figured out the secret. They will beat the market! So they put their entire $10,000 life savings into a few “can’t-miss” stocks. Then it falls and they sell sell sell! Then they do it again, and in no time it all disappears.
Don’t be this person. Instead, go slow and seek advice. You may pay some small fees but there are online resources for this as well that will help walk you through some lower-risk, savvy investment strategies and other tips to manage your money. Especially as you learn more, don’t try to be a hero. Seek advice from those in the know.
Getting Back to Basics
Money matters are overwhelming to a lot of people. It’s hard enough to maintain a decent job and pay all your bills on time. Going beyond that just feels like too much work.
But even a little effort can make a big difference. In today’s world, the New Finance 101 basics can help you get very far, very quickly. You just need to take advantage of digital tools and apps at your disposal. Jump on the credit card bandwagon and start cashing in rewards. And don’t forget that you only know so much and can use the advice of experts.
Just like that, you’ll be on your way. Take charge of your future — even with just the basics — and your bank account will be thanking you soon.
