Let’s guess: you probably learned a slew of not-so-useful facts in school: the precise time of the Boston Tea Party, the symbol for gold in the periodic table, the square root of 64. That kind of stuff.
What you probably didn’t learn? How to, you know, manage the money you earn later in life. Financial skills like how to make a budget establish good credit, or even pay for college. In fact, in the U.S., only six states require students to take a standalone personal finance course in high school. Six!
So, this year, we’re celebrating Financial Literacy Month by highlighting some of the smartest money moves you can make. Why? We want all Chime members — all Americans, in fact — to feel confident when it comes to their finances.
To kick off this money party, here are five things that our members wished they’d been taught in school — and that you’ll be hearing a lot more about this April.
1. Understanding credit
If there’s one thing that got hammered home in our interviews, it’s this: Credit is a murky pit of mistakes waiting to happen. And our members want more information on how credit works, why it matters, and how to improve it.
“Your credit is just so important,” Atlanta says. “I feel like it’s definitely something we don’t learn enough about.”
Take Atlanta, a Chime member from Indiana. When she turned 18, she signed up for a Victoria’s Secret credit card and bought a couple pairs of sweatpants and leggings. “At the time it didn’t seem bad because it wasn’t technically my money,” she says. But the interest charges quickly added up, and made it difficult to pay her other bills.
“Your credit is just so important,” Atlanta says. “I feel like it’s definitely something we don’t learn enough about.” She’s right: Nearly 4 in 10 Americans say they “have no idea” how their credit scores are determined, and 30% don’t know how much credit card interest they pay.
Sound familiar? While we’re going to publish a lot of credit-related financial literacy content in the coming month, here are a few pieces to help you get started:
2. Developing good financial habits
Good habits are the foundation of a healthy relationship with money (not to mention a healthy life). Many Chime members want help developing good money habits – especially because those habits may look very different than the ones modeled during their childhoods.
One such member is Amy-Beth, a single mother to two teenage boys in Las Vegas. “My parents made lots of mistakes, and I learned how to make those mistakes as well,” she says. “I just carried on with the same bad patterns.” She’s missed bill payments, for example, and had utilities get turned off.
For Amy-Beth, managing her finances is like constantly “trying to get your head above water” — and she wants to show her children an alternative path.
That sentiment is shared by many Americans: In a recent survey by Charles Schwab, respondents rated money management as the most important skill for kids to learn, ranking it above the dangers of drugs and alcohol, healthy eating and exercise habits, and safe driving practices.
Want to get a head start on good habits? These articles will be right up your alley:
3. Avoiding fees
Financial fees are sneaky. They often seem so small: 7% APR, $10 monthly maintenance fees, $3 ATM fees. But after a while, they add up. Big time.
she didn’t think those $35 overdraft fees were a big deal. Then she received a bank statement revealing what they’d cost her over the course of the year: $900.
When Tierra, a Chime member in St. Louis, was in her early 20s, she didn’t think those $35 overdraft fees were a big deal. Then she received a bank statement revealing what they’d cost her over the course of the year: $900. Tierra was shocked. “At that time I was making like $20,000 or $25,000 a year,” she says. “That’s a lot of money.”
As Tierra puts it, she “just got in this really bad cycle.” She’s not alone: While only 9% of bank customers overdraft more than 10 times a year, they account for 79% of the estimated $34 billion in overdraft fees that banks charge annually.
Here at Chime, we’re not a fan of fees. At all. But we know that other financial institutions are, so it’s important to understand how to avoid them:
4. Budgeting on a limited income
Managing bills and debt, determining wants versus needs, tracking spending; these are tasks many people struggle with. But when you’re on a limited income — especially when you’re living paycheck to paycheck — it’s far more challenging. Our members often emphasized the fact that they never learned how to create (and stick to!) a budget.
“When I left home, I had no budget, no idea that I should just be writing this stuff down, no idea I should be reevaluating my bills and what I could and couldn’t afford,” Tierra says.
“I just kind of got what I wanted: ‘Oh a $200 table? Great.’ I wish I’d learned more about budgeting.”
While a budget would probably come in handy for most people, only 2 in 5 Americans say they have one. Of those who don’t budget, 24% of respondents said it was because they “never stick to one” and 11% of respondents said it was because they “don’t know how” to make one.
If you’re in either of those camps, we’ve got a lot of great guides to budgeting below — and more on the way!
5. Thinking in the long term
When you’ve got bills in the mailbox and kids’ birthdays on the calendar, it’s difficult to set aside money for the future. But the truth is that opening an emergency fund is one of the savviest financial moves you can make. Our members know that; what they don’t know is how they’re supposed to start when they have so many competing demands on their plate.
“I’m always afraid that something’s going to happen and I’ll have just $5 to fix whatever it is,” Amy-Beth says.
“I’m caught up on my bills, but now I want to be able to hold on to that — and not just spend it on whatever Facebook ad shows up next.”
Amy-Beth wants to build an emergency fund so that if she pops two tires (like she did less than a year ago) she’ll be able to get new ones without borrowing money. It’s a good goal, and one that many Americans have yet to achieve: In fact, if faced with a $1,000 emergency, only 41% would cover it with savings.
Though thinking in the long term is tough, it’s also crucial. Here are some articles that will help you on your emergency fund journey:
Money moves are on the way
What else do you wish you’d learned about in school? As noted earlier, we’re going to be sharing a series of money moves in honor of Financial Literacy Month. So keep an eye out for those.
In the meantime, we’d love to learn about your biggest money challenges. Chime in with your money moves!
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