Adult 101: Personal Finances | The college butler


The first lesson for many. Graphic by Haley Morkert.


Disclaimer: I’m barely 20, still have a lot to learn and hardly any finances to deal with. Please take my financial advice with a grain of salt.

Lately, social media has made me realize that I haven’t had a singularly unique life experience. Take, for example, high school education: Did you needlessly memorize every U.S. state capital, learn one-page math proofs – just to forget about them within minutes of the chapter test – or spend days to chant “the mitochondria are the powerhouse of the cell? Because the same.

As I pursue my life beyond the four walls of my high school, I had to learn to fend for myself in the real world: I change tires, pay taxes and cook, the horror! Yet, over and over again, I wonder “why the hell didn’t they teach me this before?” A girl can only call her parents with questions a certain number of times a week.

So my friends, I have done the hard work for you. Today we are going to share the personal finance education experience.


While debit cards are convenient – and require you to pay attention to your bank account balance – the most important thing you can do for yourself as a financially responsible adult is to start using credit cards. credit.

Using credit cards will open up a line of credit which is essential for building a future in today’s economy. Credit is measured quantitatively by what is called a “credit score”. This credit score is what banks will use to determine if you are responsible enough to receive a loan, as it indicates whether or not you are reliably paying off your credit card loans on time.

However, building a trustworthy credit score requires having a good credit history, so move that debit card to the back of your wallet and open a credit card ASAP. Not to mention that you can actually get a small percentage of “cash backOf credit card companies just to spend money.

Once you open a card, it’s important to remember to pay your statement in full each month. Credit card debt can grow quickly if you aren’t diligent about repaying it. Senior Major in Accounting and Finance Austin Holley emphasized the importance of opening a credit card,

“Credit is very risky, but it’s something that everyone has to get involved in,” Holley said. “This is ridiculously important.”

For more information on credit – and advice from your own butler school – check out the Student’s Guide to Personal Finance: Credit, Insurance, and Investment Edition.

Tax anatomy

Taxes are pretty much the biggest, scariest personal finance monster you’ll need to tackle as an adult. Now, I am neither a tax lawyer nor a CPA, but I can help you understand some basic personal tax concepts.

First of all, there are age and income-based thresholds that determine whether or not you have to file a tax return. In 2020, this threshold for a single person under 65 was approximately $ 12,400. You can take an interview online at IRS website to determine if you are responsible for filing an income tax return each year. However, filing a tax return could be beneficial to you even if you do not meet the required threshold.

That being said, it’s important to know exactly what’s being taken from your paycheck throughout the year. There are three primary taxes taken from your paycheck before it’s deposited into your bank account: Social Security, Income Taxes, and Unemployment Taxes.

Let’s break them down one at a time.

Social security – also affectionately known as FICA – stems from the Federal Law on Insurance Contributions. Simply put, social security taxes are used to support the elderly and disabled who can no longer contribute to the workforce. In other words, you pay taxes when you’re young and working, but then reap Social Security benefits when you’re of retirement age, at least until exhaustion. Currently, 6.2% of employee income – up to the taxable maximum of $ 142,800 – will be subscribed for social security.

Income taxes take many forms: government taxes, state taxes and, in some cases, local taxes. At the very least, your tax return will include both a government tax form and a state tax form. However, it’s important to be careful where you work – if you live in one state but work in another, you may need to complete two separate tax returns. Software like TurboTax are tools you can use to prepare your income tax returns each year. This software can also help determine whether other forms of income, such as student loans or grants, are taxable.

Unemployment taxes are used to support people who are entitled to and need unemployment benefits. Unlike Social Security, there is no maximum amount of unemployment tax – you will be taxed at your state’s unemployment tax rate for every dollar you earn. In Indiana, the unemployment tax rate is currently 2.5 percent.

Next steps

Financial preparation and awareness as a student will prepare you for success in the real world. While arguably there should be a place for personal finance in education across the country, we have been on our own – use it as an opportunity for personal growth.

Madison Pius, a major in upper primary education, takes charge of personal finance education.

“I told myself that after I graduated, I had to take a course,” Pius said. “There is so much information and it’s too much for me to deal with on my own.”

Although financial education is not part of our curriculum, Butler offers a personal finance course open to any student – FN 241 – as well as virtual financial aid resources to help navigate the school’s own finances. Do what you can to take advantage of these resources while they are available to you and start looking for personal finance training now so that you are ready when real adulthood begins.

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