a list of expense and a bottle of White Out next to it

How many times have you lamented, “Why didn’t they teach me this in school?” when the time comes to pay your taxes? K-12 education fulfills a variety of purposes, but most schools leave financial literacy off the curriculum. This absence means you need to learn these lessons independently—often after making pricey mistakes. 

Consider the following financial topics. How much did your teacher tell you about these items? If nobody ever addressed these concerns, then educate yourself now to save considerable money later. 

Prepare Taxes

More and more Americans find themselves working in the gig economy, which means they maintain responsibility for filing payroll taxes, not their employers. This dynamic creates significant problems for the uninitiated who expect to see withholding on their paystubs. They may not understand the implications of the pay-as-you-go tax system in the U.S. until they get hit with a penalty on April 15. 

If you work as an independent contractor, then you must withhold taxes and file quarterlies. Failure to do so will result in an estimated tax penalty. Principal and interest on unpaid taxes compound daily, so use your tax software to determine how much to pay or hire an accountant. 

Use Debt Wisely 

When you earn your first high-limit credit card, it can prove tempting to treat your squad to an extravagant dinner or a day at the spa. However, maxing out your credit is problematic for several reasons. Doing so lowers your score, which can make future loans challenging to obtain. Plus, you’ll raise your interest rate, meaning it will take longer to pay off debt. 

Use debt as a tool—sparingly. If you practice discipline, then you can reap the rewards for travel or earn cash-back rewards by using your card for daily purchases. The trick is paying off the debt immediately at the end of each month. Then, you enjoy the perks without paying interest. 

Select the Right Educational Path

Did you hear, “You need to go to college if you want to make it,” growing up? While higher education offers a host of benefits, going the university route may not make the most sense for your ultimate career success. If you’re interested in plumbing, for instance, then you could earn significantly more by enrolling in a trade school than a four-year degree program. 

You can find well-paying jobs without incurring the student loan debt a degree often entails. Before you sign on the admission ticket line, make sure you feel genuine excitement about the field. Otherwise, you could incur a ton of debt for no tangible reward. 

Insure Yourself 

If you’re a member of the gig economy, then you’re responsible for paying for health insurance coverage. Resist the temptation to go without coverage. People with incomes under $150,000 per year report harboring concerns about health care costs well into retirement. A single trip to the ER can sometimes result in medical bills that lead to bankruptcy. 

You demonstrate sound judgment by purchasing disability insurance if your employer doesn’t offer it. Don’t wait until you get sick if you’re self-employed. Insurance companies base policy decisions on risk, and they will deny you coverage for the very condition likely to disable you if you wait until you receive a diagnosis.

Find Affordable Housing

People in the older generations often criticize millennials for not purchasing homes, but these critics ignore fiscal reality. While the average wage hasn’t risen much since the 1970s, the cost of affordable housing continues to skyrocket. 

High prices, coupled with tighter lending requirements, put homeownership out of reach for many. Most experts recommend spending no more than 28 percent of your income on housing. If you earn $40,000 a year, that’s less than $1,000 per month. That’s barely two-thirds of the average housing cost in cities like Philadelphia. You may need to find a roommate with whom to share living expenses. If you decide to buy a house with somebody who isn’t your spouse, then have an attorney work up the contract. This process does cost more upfront, but you stand to lose everything if things go south. 

Invest in the Market 

Are you one of the many people who shy away from investing in the stock market? If so, you’re missing a valuable opportunity to watch your money grow. Even high-yield savings accounts only pay an average of 1 to 2 percent interest, lower than the typical market return. 

If you’re not ready to leap into buying individual stocks, consider opening a mutual fund. You can select funds that support the same causes you do. These investments diversify your portfolio for you, eliminating guesswork on your part. 

Save for Retirement 

The status of Social Security depends on the political whims of those in charge. The best way to ensure you can hang up your apron one day is to save for retirement independently. Fortunately, changes in the tax code increase the amount you can sock away each year. If you can afford to do so, then maximize the amount your employer withholds for your 401(k) or other savings vehicle. If you’re one of the many self-employed, then look into opening an account with a credit union or bank. 

It’s not fair that we often don’t learn some of the most important financial lessons when we’re in school. However, taking the time to educate yourself now can make your economic future brighter!

What do you wish you had known when you were younger about finances? What financial tips and tricks are important to know?

Image via Chante Vaughn, Darling Issue No. 13 

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