Personal Finance 101: Week 1 – Financial Concepts Outlined
It has been my experience that personal finance education in our world is severely lacking. Kids grow up without being taught many of the most important parts of becoming a successful, independent adult. In fact, until I got my first apartment and had to pay for it on my own, I can’t recall ever having even a basic lesson on budgeting. I believe this is one of the main factors in Millennials being labelled the “boomerang generation”. People leave home unprepared for an independent life, only to return with their finances destroyed.
It is no surprise, then, to hear that this generation of college graduates is burdened with more debt than those who came before. There is currently $1.26 trillion in outstanding student loans owed by 43 million borrowers. About 41 percent of that debt is owed by those aged 25-34, who owe an average balance of $21,000 each, according to a recent survey by Credit Sesame. That debt would be a struggle to manage even with a solid financial education, but for many these debts will be insurmountable.
Personal Finance 101
This article is the first in a series that will be released over the coming weeks. My purpose will be to share the most valuable personal finance lessons I have learned in my twenties. There will be useful information for you whether you are just starting your independent life, immersed in a debt-free journey, or are on your way to building wealth.
This first lesson will be a general overview of concepts and terminology used within Personal Finance. I have split the personal finance terms into four categories below; General, Debt, Investing, and Business. The information contained here will be referenced and expanded in the coming lessons. It is in your best interest to begin at the beginning. Read through the list below and test your knowledge! It is my hope that some of these terms make more sense to you after reading.
Business & Career
This list is far from comprehensive; but it is designed to give you a place to begin on your journey to mastering personal finance. Some of these terms seem pretty basic, but I actually had a hard time defining a few of them. Hopefully after this week’s vocabulary lesson you have a better idea of the types of lessons you can expect over the next few weeks. If there are any topics you’d love to learn about, leave a comment on this post and I’ll be sure to include it!
How did your own personal finance education stack up? Did you know more than 80% of the terms mentioned here before reading about them?