Posted December 22, 2021 by Mark Perna
Episode Title: The ABCs of Personal Finance
Basic financial literacy is key to a person’s lifelong success. So how can young people start thriving in this area? Let’s talk about it, next on The Perna Syndicate.
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Welcome to The Perna Syndicate! This week, we’re talking about a little-known skills gap that is affecting younger workers in particular. It’s the life skills gap, and it’s preventing many young people from functioning well as independent adults in the real world.
Basic financial literacy can have a huge impact on a person’s ability to succeed in life. Where you work, where you live, whether you can buy a house, whether you can afford a medical expense, what type of food you can eat, how many kids you can have—all of that is tied to how well you manage your money.
It’s sad, but many people are making these decisions blindly, as they have never been educated about things like credit, debt, the stock market, inflation, and interest.
Young people need to know the ABCs of finance and then put it into practice by creating a personal budget. Budgeting can sound restrictive, but it’s actually freeing. Knowing what you absolutely must pay every month (like rent, car payments, student loan payments, groceries, et cetera) can help inform the rest of your spending habits to ensure you aren’t spending more than you make.
The 50/30/20 strategy can also be helpful. In this method, 50% of your take-home pay goes toward needs like rent, 30% toward wants like entertainment, and 20% toward savings.
Many young people have never even thought about money in these terms. But to bridge their life skills gap, they need to.
On our next episode: what is one thing that parents can do to help prepare their kids for an independent life? It may not be what you think. We’ll see you back here tomorrow on The Perna Syndicate!