16 Facts About Money Every Adult Should Know (But Probably Doesn’t)
In grade school, I learned how to write a check — a now-antiquated practice.
In high school, I struggled through geometry and calculus — all of which seemed irrelevant to real life (and largely have been so far).
In college, I took a finance class, so I learned about compound interest — but not how it applied to my nonexistent savings account.
If this is any indication of our financial literacy, we’re kind of screwed.
Only 17 states require high school students to take a personal finance class, according to The Council for Economic Education. Nearly a quarter of states received a failing grade in financial literacy from Champlain College’s Center for Financial Literacy in 2015.
So where do we start?
Right here — with 16 money lessons you probably didn’t learn in school.
1. Don’t Let Your Money Sit Stagnant
I did this for many years. I let my money sit in a checking account, which earned me nada.
It seems like many other Americans are doing the same. But it’s easy to put your money to work.
I finally opened a high-yield savings account and hid $100 from each of my paychecks in it. Then, because I like checking accounts, I put the rest in a high-yield checking account.
Yes, your checking account can earn interest if you find the right one.
2. Investing Isn’t Just for Wealthy Men in Suits
For the longest time, investing conjured images of wealthy men who wore suits and carried briefcases down Wall Street. Nope. Not for me, I thought.
However, investing is pretty easy these days with automated micro-investing apps like Acorns and Stash.
Each app allows you to invest a small amount — say, $5 a week. The money adds up — and the apps take care of the whole investing part for you.
(Plus, you’ll get a bonus when you sign up, so there’s that.)
3. Your Credit Reports Impact Much of Your Buying Power
If we’re being honest, I didn’t check my credit reports until after I graduated college.
But I now know monitoring my credit is an important and necessary step toward being financially mature.
Here are some tips I’ve picked up:
- Free options do exist. Check a free app like Collection Shield 360. With a free basic membership, it contacts your debt collectors to have negative marks on your credit report removed, and it provides you with credit-bureau dispute letters that can help scrub your credit report.
- Your credit reports can affect those big life decisions. They can hike up your interest rates, hurt your ability to get a loan or require you to pay a large deposit for utilities.
You’ll want to read more about these virtual reports in our beginner’s guide.
4. Plan for Retirement Before You Turn 65
The sooner you start planning for retirement, the more financially comfortable you’ll be when retirement swings around.
Start by playing with a retirement calculator. Plug in your location, annual salary, annual retirement expenses (Some experts recommend planning for 70% of your income.), retirement age, rate of return (typically 7%) and inflation rate.
If you’re 21 now, you’ll find you only need to save $100 per month — or $25 a week — to survive retirement.
First, figure out the best place to store your money. Your employer might sponsor a 401(k), but look into other options, too. This article lays them out for you.
Once you have that 401(k), you’ll want to keep tabs on it. Try using a service like Blooom, which will let you know what’s right and what’s wrong with your 401(k). For example are there too many fees?
Related: What’s a 401(k)?
5. People Aren’t Always Nice
I never dwelled on the fact that identity theft is a real thing that can cost you thousands of dollars — until my mom experienced it.
She’s not unusual. Last year, more than 791 million identities were stolen in the U.S.
It’s important to take steps to protect yourself. Keep tabs on your bank statements and credit report for any suspicious activity. A free service like Credit Sesame will alert you if any suspicious activity takes place and insures your identity up to $50,000.
Just know not everyone out there is going to be nice — and your credit card could be worth up to $30 to a thief.
6. Never Pay Full Price for Anything
I didn’t grow up in a super frugal family, so what I knew about saving money came from those crazy couponing shows on TV.
No thank you.
But saving money doesn’t always require old-school coupons. Tons of platforms can help you save money — or earn it back.
For example, try Ebates, an online shopping portal that offers cash-back opportunities at more than 2,000 stores.
You’ll score a $10 bonus for signing up and shopping through the platform.
You can score up to 40% cash back on your purchases. Here are some examples of our favorite deals (at the time of writing):
- Get up to 10% cash back on wedding decor and gifts from Etsy.
- Score $20 off your TOMS order.
- Take up to 25% off your next car rental from Thrifty.
- For a limited time, Macy’s upped its 3% cash-back offer to 10%.
The deals are always changing. Just a few weeks ago, Ebates was offering 10% cash back at Walmart. There are thousands of offers, so I’ll spare you. You can see if Ebates has something for your favorite online retailer by signing up.
7. Credit Cards Aren’t Evil
I grew up thinking credit cards were bad — at least according to my dad, who still occasionally whips out his checkbook to pay for something.
However, credit cards aren’t the worst. They help you establish credit (see above), and you can even earn cash through rewards programs.
Before looking into rewards programs, be sure you understand the difference between debit and credit cards — and the risks associated with each.
You might be thinking “duh,” but this was one of those things I didn’t fully understand when I signed up for my first debit card in high school. For example, using a debit card directly pulls money from my checking account, whereas charging something to a credit card is essentially pulling out a small loan.
Once you understand the differences, you’ll know how to use each card more responsibly.
8. Student Loans Aren’t Free Money
I didn’t understand the consequences of student loans until after college.
In fact, The Wall Street Journal recently tackled this topic and found that more than half of millennials who take on student loans don’t calculate their future payments before committing to them.
This is something you need to think about before you go to college.
Weigh your options. Is the out-of-state school worth the in-state scholarship you’d throw away? Is the private school actually better than the state university?
We can’t answer these questions for you, but you’ll want to consider the $1.4 trillion Americans have in student debt — and how you can get ahead. If the loans are worth it for you, at least calculate how much you’re going to owe each month after graduation.
If you missed the bus like everyone else and are already buried in student loans, brush up on our guide to conquering your student loans.
If you’re already out of college and trying to figure out what to do with your mounting student loan, consider refinancing it. A marketplace like Credible can help you find a better interest rate or lower your monthly payments, depending on what works best for your financial situation.
9. Don’t Put Your Taxes off Just Because They’re Confusing
When my first April after college graduation rolled around, I started panicking a little.
Crap, taxes are due. Where do I start?! Can’t I still be a dependent?
It’s best to just go ahead and tackle this. You’ll feel more confident for the next time, I promise.
Use our ultimate guide to get started. It’ll walk you through all the steps to tackle your taxes.
You can even pour yourself a glass of wine. We understand.
10. Housing Is a Serious Expense
At some point in high school, your goal becomes moving out. But it’s impossible to understand how ridiculously difficult that can be.
Not only will you need to weigh the pros and cons of buying versus renting, you’ll also need to understand so. many. other. things.
Here are a few resources for renters:
- Before you sign your first lease, review these 15 questions you’ll want to ask your landlord before committing your soul to a monthly check.
- This guide outlines how you can score the best deal on your first apartment.
- If you’re already renting and catch yourself in a rut, here are 10 ways to make money now for tomorrow’s rent.
Here are a few resources for homebuyers:
- If you think you can’t afford to buy a house, read Lauren Bowling’s story about how she bought a house on a $40,000 salary.
- Then peruse these tips for first-time homebuyers.
- If you think you’re ready to own, budget for the extra expenses.
This only touches the tip of the iceberg, but reading these help put housing into perspective.
11. Insurance Is Another Thing…
Your parents or guardians probably cover your health insurance, right?
Well in the real world, you quickly learn you need not only health insurance, but also what seems like a million other types of insurance coverage.
Let’s start with the health type. If you’re lucky, you’ll secure health insurance through your employer. Even so, you’re going to want to ask a bunch of questions to understand what you’re getting.
If your employer doesn’t offer coverage and you can’t afford it on your own, we’ve got some resources that can help.
Oh, and all the other types of insurance. Learn more about:
These aren’t necessarily things you need to understand right now — just know you’re going to have to budget for them in the future.
12. Working From Home Is a Legit Possibility
Growing up, I always said I wanted to be a stay-at-home mom. Then I went to school for six years and decided a career was important to me.
After working at The Penny Hoarder, I’ve learned you can do both — with work-from-home jobs.
There are tons of positions out there for anyone who wants to work from home in any industry. You just have to know where to look.
Some positions even allow you to set your own hours.
One easy way to start making money from home is by taking surveys. Two sites we like are Ipsos Panel and NiceQuest. They won’t make you rich, but can help you make a few extra bucks for just answering some questions on your spare time.
13. Passive Income Is a Thing
Ah, yet another term I’d never heard until I started working here.
Passive income is money you earn that’s not directly tied to your time. For example, I’m sitting at my desk at work right now. What I’m earning isn’t passive income, because I’m actively working for my paycheck.
For passive income, you’ll commit your time and energy upfront, but the idea is that money will trickle in over time after that.
To get you started, here are 14 ideas for earning passive income.
14. Your Salary Isn’t Set in Stone
Once you snag that job — or even before — know your salary isn’t set in stone. There’s always wiggle room to negotiate if you feel like you deserve it.
Take some tips from this guide: Eight not-so-scary tips for negotiating your salary.
Related: Searching for a job ain’t as easy as it sounds.
15. Everyone Needs a Rainy-Day Fund
Even if you live in the Sunshine State.
A rainy-day fund, or an emergency fund, serves as a backup plan. If you incur an unexpected expense — a medical bill, car repair or broken air conditioner — you can tap into your rainy-day fund to cover it.
Many experts suggest you stash away about six months’ worth of living expenses, including rent, groceries, gas and bills.
You’ll want to hide this money — far away from temptation’s reach. Here’s more information on starting that rainy-day fund.
16. Creating a Budget Doesn’t Require Excel Sheets
I went through high school, college and grad school without a budget. That’s slightly terrifying.
A budget helps hold you responsible for your spending habits… ideally. And it doesn’t require a complicated Excel spreadsheet. It’s a lot easier than that.
Check out all these budgeting tips to get you started.
Oh, and we’re just getting started with savings. Check out all the ways you can save on groceries, eating out and shopping online.
Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder. She didn’t know a whole lot about money — except that she needed it — until she started writing for The Penny Hoarder.