3 Things You Must Do If You’re Clueless About Finances
Hope you guys enjoy today’s guest post from my friend Mila! Let us know what you think!
I hate money. I really do. Don’t get me wrong, I love SPENDING money, and if I do say so myself I’m still pretty good at saving (despite the spending). I just hate DEALING with it. I know nothing about money and most things related to it. I mean, I still get help from my mom to do my taxes! I always feel like I’m not mentally prepared to handle money issues on my own. How do I invest? What’s the difference between a 1040, a 1040A, and a 1040ez? What is compound interest, and why do I get so little interest in my savings account, but pay a bunch of interest on my school loans?! Why weren’t we taught this stuff in school?!
Growing up financially is hard, and I’m sure others in my situation are feeling the same way. But we are smart and capable, and we can do this! We just need some helpful tips and knowledge to guide us through.
Learn the Jargon!
To really understand the heart of money matters, it’s probably good to learn some of the lingo you often see in the financial world. Typically when I see words like “assets,” “equity,” and “depreciation” on a financial document, my brain shuts down and my eyes glaze over as a defense mechanism. Understanding a word on its own and understanding it within certain context don’t always go hand in hand. Having a definition list of the top 10 most used accounting terms is a great way to always be able to (mostly) decipher the documents you’re reading in the monetary context they were intended.
Learn about buying a house!
It may seem like a pipe dream to many people my age, but some millennials are actually buying houses. That’s my current dream – to buy a house of my own with a big backyard for my gigantic German Shepherd puppy to run around in. I’m sick of throwing my money away on renting and having to pay huge deposits because of my dog. I’m ready for my own house. Financially it’s super scary though, especially going into it alone. It’s a big decision and a big purchase. It’s important to learn about house buying and selling trends, so you can buy at the best time of the year. It’s also important to get pre-approved for a home loan. I’ve been looking into that recently, and getting pre-approved will not only give you an idea of what you can afford with your current financial status, but it will streamline the process when you do stumble on a house you want. When you are pre-approved and watching the market based on buying and selling trends, you can be sure to get the house you want almost as soon as you find it.
Prepare for taxes all year!
As much as we all hate taxes, they’re one of the two certainties in life and they’ll always be around. As with most things we hate, we tend to put them off until the last minute. Procrastination may be a go-to when it comes to school work or housework, but it’s not a good idea when it comes to taxes. It just causes a lot of extra unnecessary stress, and may make you lose out on some money. If you want to take the stress out of taxes, it’s best to be preparing for them year round. Start with saving copies of the previous year’s documents; you will always need to reference them, and it can help fill out the next year’s returns. Always save any receipts for purchases related to work, school, or donations you’ve made. If you keep them organized throughout the year, they’ll be easy to claim come tax time. By prepping all year, you are bound to get the maximum return possible, and that is always a plus!
It all can be confusing and frustrating, but take it easy and don’t tackle too much at a time. Figure out some basic finance terms and apply them to your situation. Look at the housing market where you live and investigate if that’s a good road to go down. Finally, make sure you’re on top of your taxes and don’t procrastinate! Once you’ve figured those things out, you can tackle them like a pro and move on to more advanced stuff, like investing or planning retirement one day!
Mila is a writer with a BA in English Linguistics living in beautiful Boise, ID. Her ambitions include traveling the world, studying languages, and taking pictures of her dog, Baymax. Connect with her on twitter and instagram!
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