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Forbes: 7 financial skills every 20-year-old needs to learn

Canadian dollar coins vector illustration, financial theme
Nancy Anderson at Forbes writes:

When I read 20 Things 20 Year Olds Don’t Get, by Forbes contributor Jason Nazar, I immediately imagined parents frantically forwarding the post to their kids. Baby boomers, myself included, want our adult children to be successful in the workplace. But there’s an ulterior motive, as well … we want to retire someday!

Nine out of ten baby boomers provide some kind of financial support for their adult children according to an Ameriprise Across Generations study. Corporations worrying about a “retirement brain drain” may be doing so needlessly, since that won’t happen until boomers deal with the “money drain” in their own households.

And so Ms. Anderson gives us 7 financial skills / tools that can help 20-year olds. Here are a few:

Obtain and keep a good credit score.

A strong credit score can make all the difference between securing the apartment you want and losing out in a competitive rental market. In our case, we missed the boat on helping our kids establish credit early. This hampered them later when they wanted to move into their first apartments and get competitive interest rates when buying their first cars.

Then there’s this valuable lesson:

Keep your overhead low. Subscription model pricing can help consumers keep upfront costs down. This can be a good thing as long as it doesn’t get out of hand. Sure, it’s nice to listen to Pandora without commercials and it seems like a bargain at $3.99 a month. But would you really shell out $48 if you had to hand over cash from your wallet just to have commercial-free internet radio for the year?

Consider this line of thinking with all recurring expenses we have today: cable TV, cell phones with data packages, satellite radio and internet. For entertainment we have Netflix NFLX +1.6%, Hulu and Amazon Prime. These “necessities” can easily run upwards of $250 a month if you aren’t careful. Cut the ones that aren’t truly “needs” to keep your overhead low.

And how about this one? I love the “business arrangement” idea:

Choose the right roommate. What are the characteristics of a perfect roommate? At the top of the list is someone you can rely on to pay rent on time every month. Then you’d want someone who is clean, keeps to him- or herself and is never around! Before my kids were born, I rented out a room in my house to medical residents doing their rotations at the University of California, Davis Medical Center. Medical students were perfect roommates because they paid their rent on time and were interesting to talk to when they were around (which wasn’t often).

Sharing your space can be a huge boost for the budget, but you have to pick the right person or it can be a nightmare. If you think about it as a business arrangement rather than living with your best friends, you have a better chance settling into something sustainable.

There are some other good tips and explanations to be found in the original article here: Forbes.

More stories about finance.

Photo credit: svetabl – Fotolia.com

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