Financial Management; The Path to Success

Keepin’ the books - An example of the financial algebra course textbook. A textbook is necessary since the course is heavily math oriented. Photo  

Keepin’ the books – An example of the financial algebra course textbook. A textbook is necessary since the course is heavily math oriented. Photo credit:

Daniel Boudreau, Feature/News Editor

Budget Breakdown – An Infographic depicting NerdWallet’s personal budgeting tool. This tool is designed to help break down one’s paycheck into savings, needs, and wants. Image credit: NerdWallet App

Over one-third of young adults are in financially precarious situations due to their own financial mismanagement according to a recent study by the University of Illinois. 

According to financial algebra teacher Andrea Gaul, these young adults could in no time suffer from credit card debt from impulse buying, overspending due to the lack of a proper budget, and late payments on loans or rent. Proper financial management as a young adult comes with many benefits.  Gaul said, “You can function in society better; you will also possess financial independence and stability.” 

It is not necessary to be a financial expert, there are many simple steps that can be taken to largely improve money management skills.  Gaul said, “keeping track of bills, participating in online banking, and budgeting your income” are several ways. 

Budgeting can sound like a daunting task, but according to NerdWallet “spending 50% of your income on necessities and 30% on wants, allocating the remaining 20% to savings” is a simple way to go about doing so. Regarding specific needs, “budget for groceries, gas, surprise expenses such as eating out and other loans you are currently dealing with such as college” said Mrs. Gaul. 

It is extremely important to always be saving money, having it in your account now could make a big difference later. “Make saving money quick and easy by having your employer direct-deposit part of your paycheck into a federally insured savings account,” according to the FDIC.  This will most certainly assist in saving money subconsciously. Mrs. Gaul stated that you should “save for independent living, maybe retirement in some cases, and definitely for your next car.”

 Having a set budget should not prevent the spending of money if there is an emergency. “Don’t be discouraged if unexpected expenses force you to tap the fund. It’s meant to be used and replenished” NerdWallet said. However, it is extremely important not to overdraft (spend more money than one has). A proper budget should also leave room to purchase wants or engage in entertaining activities if one has budgeted for them properly.

Despite a large percentage of young adults who lack proper financial management skills, the outlook is not entirely pessimistic. The amount of people who have money managing skills is growing but “there is a lot to learn about practices and there is not as much focus as there used to be”  Gaul said. 

Regarding making investments, Gaul stated, “It is incredibly important to do research or talk to someone if you decide to take this route”  She added that it is safer to put your money in high-interest long term bank accounts that are guaranteed to make you money in the long run and they will provide you with more financial stability.

For those who want a deeper understanding of financial management, WSHS offers a variety of courses such as financial algebra that broadens students’ money management perspective. 

Senior Sasha Dominguez said, “The course is good for real-world situations.” Dominguez added that she learned how to write a check and balance a checkbook and is currently learning about interest, credit, and accounting for transactions.  Dominguez said she “definitely recommends the course; it is helpful for real life; the teachers are very good, and it only includes work with basic algebra.”

While a large portion of young adults mismanages their finances, Gaul stated, “The amount of young adults who are properly managing their money is growing. There is a lot to learn about good practices; however, the situation is not as bad as it used to be. There is definitely still a long way to go.”