Do You Know the Financial Basics?
I am NOT a financial advisor, expert in investing, or wealth guru by any means, but what I am is a young adult who has learned A LOT about money in my recent years. However, it’s no secret that financial talk probably isn’t at the top of your priority list. While money can be a great thing, it too often becomes a source of stress in our personal lives and relationships. While financial stress might not be completely avoidable, it CAN be managed.
When working with your finances the worst thing you can do as a young adult is bury your head in the sand. Avoiding your finances and all the baggage that comes with them can cause some SERIOUS damage. The first step to getting a handle on everything is simply arming yourself with knowledge. The more you educated yourself, the more confident you will feel. The more confident you feel, the easier it will be to start making smart decisions.
Becoming financially aware is a process though and taking baby steps is a great way to tackle a somewhat intimidating topic. Now, there are a lot of terms thrown around when it comes to the financial world. While I don’t know if I’ll ever get a proper handle on ALL of them, below I’ve posted some basic terms that you NEED to be familiar with. Could YOU define them on the spot if asked?
Check it out
Account - Think of this as the digital container that your credit union uses to hold your money. In reality, it’s the accounting of how your funds flow in and out of your credit union.
Check - A written authorization that lets another person or company withdraw money from your account.
Checking account - This is a transactional account, meaning that money flows in and out constantly. Paying bills, depositing checks or buying coffee are some common transactions. Because of this constant movement of funds, these accounts pay very little–if any–interest.
Credit card - A credit card is like an easy-access loan from your credit union. It typically has a maximum limit and an interest rate. Credit cards have pros and cons to them, so do your researches before signing up to get that FREE T-shirt.
Debit card - A debit card gives you access to the cash held by your credit union. The debit card has replaced the use of checks for most things, except personal payments between people.
Debt - An amount of money you owe to someone, even if it’s your mom (ESPECIALLY if it’s your mom!)
Loan - A sum of money you borrow from your credit union. The loan will have a preset monthly payment and rate of interest that you pay on top of the money you borrowed. Think of the interest as a fee for borrowing the money.
Savings account - An account meant to accumulate money towards a particular purchasing goal. It generally pays a modest amount of interest (also called dividends).
Shares - One share represents ownership in your credit union. When you join a credit union, the membership shares you buy stay in your share account.
These terms might seem pretty simple, but truly understanding their definitions is important. After you’ve taken a look at them for yourself, try quizzing a friend or two to see if they can PROPERLY define them. Chances are they might have a harder time forming them into words than you think. Remember, knowledge is power, so why not help your friends and family by sharing this information with them! As always, comment below if you have any thoughts, tips or tricks to add!
Until next time,