Smarter Money Life: Money Concepts Your 18-Year-Old Should Understand

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Hi everyone, welcome back to Smarter Money Life powered by FORUM Credit Union. I'm Andy Mattingly and today we're diving into a crucial topic: the money concepts your 18-year-old needs to understand. Turning 18 is a significant milestone. It's the beginning of financial independence and responsibility. Today I want to cover the essential concepts that every 18-year-old should have if they want to have a successful financial future.

First up, managing a financial account. This is the first step towards real financial independence. It's important to choose the right account and type that suits their needs. They might need a debit card they probably want a mobile app. They probably want to be able to do transfers in accounts so make sure they understand all these terms and conditions and they know how to avoid fees at all cost and that they know how to use the account properly.

Next let's talk about budgeting. Understanding how to manage income and expenses effectively is crucial and even an 18-year-old can use the 50-30-20 rule which is spending 50% on needs 30% on wants and saving the other 20%. Establishing a weekly spending limit and having a 24-hour waiting period for any unplanned purchases are some other things they can do to help them stick to their budget.

Savings is something that's also important and setting aside money for future needs and emergencies really kind of is an essential financial concept. Early saving and investing can harness the power of compound interest and they may need to understand how that helps them and how growing their money also gives them more money. If you prioritize saving and investing dollars for the future ahead over any other current expenses and goals that can be really important. Investing is a great way to grow their money so make sure they have basic knowledge about investing and the benefits of starting early and how that can make a difference. Remind them the earlier they start the more time their money has to grow.

Understanding how credit works including credit scores and responsible use of credit cards is kind of vital. If you want to get your child a credit card when they turn 18 that's a great idea. If they are not able to do it then make sure they are using their cash and debit cards or prepaid debit cards instead of credit cards wisely.

Finally you also want to discuss debt management. This means how they can avoid debt maybe student loans or other things for financial success. If you can minimize their education costs by exploring scholarship grants and work study or tuition reimbursement options they're going to be better set for the future. If they do go to college remember financial independence starts with understanding these key money concepts that you need to make sure that you're covering with your kids.

Thanks for joining us on Smarter Money Life, I hope you found today's tips and insights useful. Remember smart financial decisions can lead to a brighter more secure future. If you enjoyed this video give us a thumbs up, subscribe to our channel, and hit the notification bell so you never miss an update. Share your thoughts and questions in the comments, below we love to hear from you and until next time keep striving for financial success and living your best life.