12 Financial Principles Every Young Person Should Know

1. 12 Financial Principles Every Young Person Should Know

2. Map your financial future – list your financial goals, along with a realistic plan for achieving them • Don’t expect something for nothing – if it sounds too good to be true, it probably is • High returns equal high risk – the higher the rate of return, the higher the risk of losing some and quite possibly all of your investment

3. Know your take-home pay – net income after all mandatory deductions is more important than gross pay • Compare interest rates – you should shop for credit just as you would for any other item • Pay yourself first – set aside a reasonable amount each month for long-range goals and emergencies

4. The rule of 72 – to determine how long it will take for your money to double, divide your rate of return into 72 (if you are receiving a 6% return, your money will double in 12 years, 72 divided by 6) • Your past credit determines your future credit – negative credit reports affect your future ability to borrow • Start saving young – the sooner you start saving, the more wealth you will accumulate

5. Stay insured – an insurance plan is important to avoid being wiped out by an accident or illness • Budget your money – prepare budgets to identify income, expenses, and savings to help you live within your means • Don’t borrow what you can’t repay – before you borrow, consult your budget to determine what you can afford

6. No one plans to fail, but many of us fail to plan