The younger generation is building credit card debt at a rapid speed, and many of them do so right after graduation. Sure, there are financial classes available in most universities, but students are instead interested in socializing with new friends and taking the bare-minimum of hours required to be a full-time student. I know I didn’t take any financial literacy classes in high school or college. A recent study from Ohio State University suggests that members of the current generation are more likely to die with credit card debt than anyone else. Here are a few more astonishing facts:
- Only 22 states currently require a high school course in economics (S1)
- Less than 20% of educators feel confident to teach topics involving personal finance (S1)
- Students in states where a financial education course is required were more likely to have positive financial behavior, more likely to save money and pay off credit cards in full each month, and less likely to max out credit cards or make late payments (S1)
- 26% of responders stated a lack in self-education on personal finance topics (S2)
- Only 5% of students claim they learned about money from educators (S3)
With proper education early on, these growing adults might be able to avoid the stressful turmoil debt can cause. One company, CompareCards.com, created a few resources –A Guide for the First Time Credit Card Owner and The Basics of Investing- for the young adult ready to take on the financial world and succeed at it.
Guide for the First Time Credit Card Owner
This is a guide for high school graduates, college students or graduates who are ready to get their first credit card. There’s some overlapping material from the high school lesson plans, but it digs deeper into credit card processing. Real-life situations are covered like making credit card payments, how to increase your credit limit, proper money management, disputing claims, and more. With this information, the first time credit card owner should be prepared to make educated financial decisions and steer clear from credit card debt throughout their life.
Industry experts advise to invest early and develop a diverse portfolio. One example that has vividly stuck in my mind when it comes to that theory is an example in the book, “I Will Teach You to be Rich,” by Ramit Sethi. Here, he easily shows how investing early pays, even without any extra work:
|Smart Sally||Dumb Dan|
|When beginning to invest, the person is…||25 years old||35 years old|
|Each person invests $100/month for…||10 years||30 years|
|With an 8% rate of return, at age 65, their accounts are worth…||$349,856||$271,879|
The Investment Guides cover the basics of investing and how different investments work. Terms are defined like stock market, shares, stocks and bonds, and more. Additionally, bull and bear markets are covered as well as stock types and sectors, and other types of investments.
It’s best to arm yourself with knowledge about credit cards and the fees associated with them so you can avoid unnecessary debts. If you have a balance of $2,000, for example, and you miss a payment on your awesome 0% intro APR credit card, and the penalty APR is 29.4%, the total amount you owe is now $2,498 –and that’s only if you pay it in full that first month. If you hold off and pay it down month-over-month paying $50 per month, you’re looking at over 13 years to repay that balance and about $6,000 in interest charges alone. Always remember, the single most important thing you can do to be financially successful is to start early.
- Survey of the States: Economic and Personal Finance Education in our Nation’s Schools (2011)
- Poll conducted by CompareCards.com (2013)
- VISA Inc. Father’s Day Survey: Too Few Parents Teach Kids Personal Finance (2011)
Kari Luckett writes about financial topics for CompareWallet.com. Kari is the content strategist for CompareCards.com