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With graduation season upon us, now is a great time to review five key money basics for both students and the entire family.

Top 5 Financial Basics

• Understand your net worth. Get used to making this calculation at least once per year. It equals everything you own minus everything you owe others. For young graduates, this number will probably be negative due to debts, which is ok. The key is to measure this number over time and set a goal to improve it each year. Positive net worth opens many doors, including the ability to start a business, get a first home, or even lower your car insurance bill.
• Understand basic money mechanics. Review and understand a paycheck, along with learning about the basics of Social Security, Medicare, and common withholdings to pay for taxes. Then review and understand basic banking products. Actively managing your cash in today’s high inflation environment can yield meaningful interest income, something long missing from banks. Learn how to review and catch banking errors or fraud, and understand how your debit and credit cards work, as well as overdraft protection.
• Carefully manage debt. It is easy to burden yourself under a pile of debt. Credit card companies will fight each other over getting their credit card in your hands. And they love when you carry a balance on their card. If you do carry a balance, you are often paying 2 to 5 times the cost for every purchase you make. So ALWAYS pay the credit card bill in full each month. The next debt mountain built is from student loans. While unavoidable for many, try to minimize the size of the loans as much as possible.
• Understand basic expenses. Food, transportation, utilities, insurance, taxes, rent, and medical expenses are just several examples of everyday expenses. The best way to understand these expenses is by creating a budget. Then, before every big decision, research the costs and talk to people that have been in your shoes so you see how it fits into your budget. In addition to recurring expenses, plan to save three-to-six months of expenses for unforeseen emergencies.
• Invest in yourself. Remember, your most valuable asset is you. So invest in things that make you more employable and provide greater lifelong income earning potential. The best return is often one that is made to create a better future.

The world of money and finance can seem overly complicated. So keep asking questions and seek advice until you fully understand the mechanics of money and how it impacts your situation. You’ll be amazed at how powerful that feeling can be.