Youth Finance Lessons


Money Lessons for Students

  1. If you want to make money, hang around those people who have it.  The goal is to either help friends who don’t have any money by making it, or start associating with those people who do.
  1. Act as if you are in business, whether you are working or not.  If you hang around people who are constantly seeking opportunities you will start finding them yourself.
  1. Make use of your education.  Can you type?  Do you know desktop publishing?  Can you organise things?  Can you write well?  Are you a journalist?  Can you teach your favourite subjects to others?  If you can think of something you can do, you have marketable skills for making money.
  1. Money is not the root of all evil.  This is a big misconception about money.  Money is not the root of all evil – the love of money is.  Money is totally harmless unless it is in the hands of a fool.  Money is a good servant, but it is a terrible master.  If your income goes up and your IQ goes down because of money, you are not appreciating it for what it is.
  1. Ask and you will receive.  The only way you will ever get anything from anyone else is to ask for it.  Ask other people if there is anything you can do for them (legally) to earn extra money.  You may be surprised at the number of yes’ you will get.
  1. Give out to others.  One of the best lessons you may ever learn is that if you give to those in need, it will come back to you.

 

A Students First Experience with Credit
It is very easy for students to get caught up in the credit card trap.  Understanding credit may help you become a good credit consumer and this can set how you deal with credit for life. 

School or university may be the first experience you have with credit.  Banks and retail stores are throwing credit cards at everyone, including students.  This comes across students, even those without jobs.  The truth is banks and retailers will always be looking for new business and you will always be a prime candidate.

There are two things banks know about offering credit to school and university students:

  1. It is most likely that you will be a customer for life.
  2. If your credit cards fall behind your parents will usually end up paying the balance.

University and school students are therefore good business for some banks.  But it is also the perfect time for you to establish a good financial record, by following good credit guidelines from the start.


Check Out Different Types of Credit Cards
Visa and MasterCard are probably the biggest credit cards available.  A good way to establish your credit rating is to make a small purchase on a normal retail store card each month and then pay off the balance when the bill arrives.  This will show creditors that you are not spending beyond your means and that you can handle any repayment obligations.

You can then apply for a Visa or MasterCard, which may get you into more debt, but if you follow proper credit guidelines you should be able to handle it. 

It is wise to have a major credit card for emergencies only and use it only for that.  Unfortunately, you will have to keep it in your wallet all the time and you may be tempted to use it for other purposes.  But stay strong and use it only when you desperately need it.


You Must Avoid Credit Card Debt
Young people need to learn from their mistakes, so look at these six simple solutions to help avoid the pain and humiliation of having debt through credit cards.

  1. Keep the number of credit cards you own down to one.
  2. Make sure the card you have requires you to pay the entire balance off at the end of the month.
  3. Make sure that the one card you have has a low interest rate.
  4. If you cannot afford to pay cash for an item you desperately want, don’t get it (other than in an emergency).
  5. Avoid the following credit card expenses at all costs: - Christmas gifts, computer games, CDs, going out to eat, clothes, gas, out of town trips, music, concert tickets.
  6. If you can’t keep your hands off the single credit card you have, put some water in an older jar, drop your credit card in the jar and freeze it.


Create and Maintain a Simple Budget
You need to learn how to budget.  This is important, particularly to monitor your expenses, even if it is a little complicated. 

Start by identifying your income and expenses: 

  • Your income is part-time work, money from parents, any government aids, bursaries, etc.
  • Your expenses are university books, entertainment, clothing, meals, and travel.

By putting all this together you should see how much you can afford to spend with the amount of income you have.  Set out a simple budget that you can maintain and you will soon have the starting plan for your finances that you can control.


Tray and Pay Your Bills on Time
Remember that late payments can show up in your credit record.  If you make a dent in your payments record, this will affect your credit rating and it may be difficult for you to get credit in the future.  This applies to all bills, including rent, credit cards and other loan payments.

If you can, send the payment the day you receive the bill, even if it is not yet due.  If you find your cash flow is a problem you may need to keep some payments back by cutting out on some luxuries you intended to spend the money on. 

When you send a cheque, make sure it is paid with enough time to go through the mail. Don’t get into debt at the beginning of your life.  Stay out of debt by paying your bills on time and keeping a good credit rating.


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