Amy M. – Gilbert High School

Financing for the Future

In the 18 years of my short life, I have been anticipating the moment where I became financially independent. Although now that the time has come, I realized it was time to prepare myself. As Napoleon Hill said, “Money without brains is always dangerous.” Anybody who has money but not the brains to make smart decisions on how to use it will inevitably be on a path to self-destruction. Planning how to manage my own financial responsibilities is key.

The first thing I would begin with is establish credit by applying and hoping to get approved for a Guitar Center Gear Card. That is a credit card with a limit, from which you can buy musical instruments and gear, then pay off in increments over a designated period of time (without interest). Of course, there are other ways of doing this such as being a cosigner. A secured card is also an option. This is a card from which you make a deposit and it becomes the spending limit on the card. If you are not able to pay what you have spent from the card, it is taken from the deposit. Establishing and building my credit, as well as maintaining a good credit score (also known as a FICO score) will help me in situations like getting approved for loans in the future. It would also determine my interest rate. The reality is that all lenders or major costs like cell phone bills, cable, insurance, mortgage, credit card, auto loan, and student loan payments all use credit scores as a factor. Not establishing credit especially right now, would be a huge mistake. Without a credit score, it is more difficult to get approved for things. You need credit to get credit. This will definitely matter starting now, and as for as long as I live.

In order to help me manage money in a smarter way, I would also start using budget tracking apps. Since I’m young and barely starting out, this will help me to prioritize certain spending’s. Separate total fixed expenses like rent and car payments, or any other bills from flexible costs like shopping, dining out, and splurging. This would also prevent that I go broke unintentionally. Another thing about it is that I would be aware of errors or of identity theft, as well as avoiding and reporting them. About 7% of U.S. residents, aged 16 or older have been victims of identity theft. This is when people steal your information to open accounts, file taxes, and spend money. This can wreak havoc in your life. Something as simple as using a budget tracking app can help.

Being financially independent is being in charge of your own budget and bills. That means nobody else but me is keeping track of my own expenses. It is critical that I avoid overdrawing my bank account. This is due to the fact that in the case of an overdraft, the bank fines you and that’s obviously losing money instead of saving. Now, if the fees are paid in a timely manner then it won’t affect the credit score, but if not, it does and fees are sent to a collections agency. Collection agencies are not only a nuisance, as they mail you and call you persistently, but your credit score also suffers. It’s best to avoid it all together. This will train my mind to be conscious and aware of my spending limit. Which, in the long run, will help me save money instead of losing it.

Another important thing to do is save money. I plan to set up automatic transfer to savings. This can be used for more expensive purchases such as cars, homes, vacations etc. But, I would also be prepared for unexpected financial emergencies such as a death in family, expensive medical costs, or automotive repairs. In case of emergencies, if I do not have any savings, chances are it would put a dent in my wallet and bank account.

These tips will definitely get me to start off on the right path. I am prepared and will be conscious of my expenses. I will be aware of how much money I have, how much I make, and how much I spend.

This will ensure that I am successful. I will avoid any possible problems that can lead to debt by having the brains and knowledge to make the right choices and take the right steps. I am financing for my future.