What are The Fundamentals I Need to Know as a Successful Graduate?

Frankly, accepting an employment offer or being self employed is only the first step in the stairwell of personal finance. Here are ten principles of financial literacy that every college graduate needs to understand and then apply into their life in order to be financially well. The acronym CRABSTICKS may help you remember these principles.

 

 

Calculate: Calculate your net income pay and look over your gross paycheck. Also look over your taxes and deductions. Each month, make decisions that will benefit your earnings, payments, and retirement investment.

Respect: Respect and apply financial rules into your life. The rule of 72 helps you figure out how long it will take for your money to double by dividing the interest rate into 72. The rule of 20/10 states that total debt, excluding mortgage, should not go over 20% of your net yearly income. A monthly payment on such debt should not exceed 10% of your monthly net income.

Assess: What is your current relationship with money management? Understand the knowledge, action, and behavior connection in personal finance.

Budget: Budget your money and then stick to your budget. Remember that sticking to your budget will get you closer to your financial dreams.

Separate: Separate out your needs and wants in a list. You can make informed decisions about whether to buy an item or not based on your budget and which category the item falls into.

Think: Think about and plan out your financial destinations for your financial future.

Insured: Insurance is something nearly everyone, if not everyone, should have. If something unexpected were to happen, the last thing you would want to deal with at that point is paying out of pocket for emergency expenses. Stay insured with health, medical, life, car, home, and other relevant insurance plans.

Care: Care for your credit history by managing your debt wisely and keeping a high FICO score.

Keep: Keep your borrowing under control. Do not borrow what you cannot pay back. When making purchases, especially expensive purchases, try to save when doing so. 

Save: Paying yourself first means that you should save before you spend so that you can avoid accidentally spending all of your net income for the month before you have put any of it towards savings.

Practice Question

1. Which of these principles do you need to work on, and how will you work on them?

 

Next Chapter:

How Can I Accommodate My Future in My Current Plans?

All Chapters:

[Chapter 1]: Graduating Gracefully

[Chapter 2]: What is Commonly Overlooked when Job Searching?

[Chapter 3]: What are The Fundamentals I Need to Know as a Successful Graduate?

[Chapter 4]: How Can I Accommodate My Future in My Current Plans?

[Chapter 5]: What Are Strong Strategies for Financial Security?