Financial literacy is important for all teenagers. Its never to soon to, with the help of parents, start saving money, open up a life insurance policy, invest in stocks, and otherwise plan for the future. One of THE most important parts of your financial life is credit. Unfortunately, most schools still lag behind in teaching this critical subject. So we got some tips straight from one of the big three credit bureaus, the ones who give you a credit score and report to lenders when you try to get a credit card or loan.

Experian wrote up the 10 Ten Credit Myths Debunked piece below in conjunction with their annnouncement of a new way to boost scores. It is called Experian Boost, and according to them its a:

“free, groundbreaking online platform that allows consumers to instantly influence their credit scores.”

From what we can tell, the way it works is you connect your online bank accounts to their platform, and they will analyze your cell phone, electric, and other payments (which the credit bureaus usually ignore) to generate a better score — instantly.

If your credit is already great, this might not be for you, because it’s designed to provide the largest boost to those with low scores. However, if you are in the 580 to 669 range, it can save you a lot of money on interest — because higher scores mean lower interest rates!

From Experian:

Experian Boost will be available to all credit active adults in early 2019, but consumers can visit www.experian.com/boost now to register for early access. By signing up for a free Experian membership, consumers will receive a free credit report and FICO ^® Score immediately, and will be one of the first to experience Experian Boost. 

What are some other smart ways to handle credit and improve your credit score when you start getting credit at age 18?

• RULE #1: Pay on time. Always.
• Use your credit cards to buy everything in order to earn cash back or airline miles, but pay off the balance every month.
• Have at least 5 tradelines (meaning, credit accounts) open. Most companies will keep your account open as long as you use your card at least once per year.
• It pays to use a secured card or higher interest card when you are first starting out to establish a history, but once your credit score improves and you open accounts to replace them, close the higher interest cards. Do NOT close accounts if you are planning to finance a car or apply for a loan soon, because closing older, positive history accounts might lower your score for a while.
• Keep your overall balances to less than 30 percent of your total available credit. So if you add all your cards together and you have $1000 in debt, but your total available is $5000, you are at 20 percent credit utilization, which is okay.

Now, let’s get to Experian’s tips!

10 Credit Myths Debunked

By Experian

When it comes to debt, credit reports, and credit scores, conventional wisdom is peppered with myths, misunderstandings, and misrepresentations. Credit is a tool. Like any tool, it’s neither good nor bad in itself. What matters is how you use it.

Myth #1: Debt is Debt

Not all debts are equal. Say you’ve got a $150,000 debt on your credit report. If it’s there because you maxed out your credit cards to throw a birthday blowout for yourself two years ago, then you’re in trouble. Today, that debt is giving you nothing but memories (and maybe an ulcer). But if that $150,000 is your mortgage, then you’re probably just like millions of other responsible homeowners. That debt is giving you a warm place to lay your head at night.

Myth #2: Checking Your Credit Report Will Hurt Your Credit Score

A notation called an “inquiry” goes on your credit report every time someone (including you) looks at your file, and rumor has it that inquiries can hurt your score. Well, yes and no. An inquiry affects your score only if it’s related to a credit application that you have submitted. If you apply for a loan or a credit card, your score might fall, because that application suggests you’ll be adding debt. But if you simply look at your own credit report, the resulting inquiry won’t affect your score. If anything, checking your report is a sign of responsible credit management, though you don’t get points for doing it.

Myth #3: Closing a Credit Card Will Improve Your Credit Score

If you have a credit card you don’t use, you’re unlikely to improve your score by closing the account. In fact, closing the card might even lower your score at first. One important thing scores use to measure risk is how much of your credit card limits you use — a ratio known as “credit utilization”. When you close an unused account, you reduce your total available credit, so your credit utilization rate goes up. (Of course, if an unused card creates an unbearable temptation to spend, you may be better served in the long run by closing the account.) Scores usually bounce back up after a few months, if your credit report is otherwise in good shape.

Myth #4: You Only Have One Credit Score

There isn’t just one single credit scoring formula that applies to all consumers in all situations. By some estimates, there are more than a thousand scoring models in use in the credit marketplace. A consumer could therefore have dozens or even hundreds of different credit scores depending on the lender using it and the types of lending being done. Lenders and others check your credit score for different reasons, and each formula looks at your credit history in a different way, giving different weight to various factors.

Myth #5: Credit Bureaus Give Good and Bad Scores

Credit bureaus do not create credit scores. Credit bureaus collect information about your debts and use that information to build a credit report. Credit scores are generated based on information in your credit report. Those scores are neither objectively “good” nor “bad.” They’re a measure of risk. It’s up to lenders to decide whether a given score meets their criteria for extending credit. And, scores are usually just one factor in their decision. A “good” score might not mean much if you don’t have a job or any assets. Likewise, a high income and a stack of gold bars might outweigh a “bad” score.

Myth #6: Better Job, Better Score

Your income has no direct effect on your credit score. Scores are based only on the information found in your credit report. Your report includes a lot of information about your use of credit and your management of debt. But it doesn’t include your income. In fact, it doesn’t even indicate you have a job. It lists the employers you’ve included in past applications, but if you haven’t applied since you last changed jobs, it might not even list your current employer. That said, your employment situation can affect your score indirectly, in terms of your ability to pay your debts. And when you apply for credit, lenders will probably ask about your income.

Myth #7: Spouses Have a Joint Credit Report

There’s no such thing as a joint credit report — for married couples or anyone else. Married or single, you have your own credit report. If you’re married, you and your spouse may have a lot of joint accounts, such as mortgages, car loans and shared credit card accounts. Those joint items will appear on both your credit reports and will affect both of your scores. But your credit report is yours and yours alone.

Myth #8: Paying Debts Erases Them

Pay off a debt and you’ve eliminated your obligation — but the evidence of that debt can stick to your credit report for years. If you pay your debts on time and in full, you will likely want your paid-off accounts on your credit report because they show that you’ve used credit responsibly. If, on the other hand, you’ve been chronically late, missed payments or defaulted entirely, that’s a problem. Most negative information can remain on your report for up to seven years; some bankruptcies can stay there for up to 10 years.

Myth #9: For Those With Little or No Credit, It’s Difficult to Build Credit

While people with limited credit history and low credit scores may have a hard time building credit, new tools are becoming available to help. One way to instantly increase your credit score is by using Experian Boost, a free service that incorporates your utility and mobile phone payment history into your Experian credit file. This can help you build up more credit history, which helps improve a credit score. It is a great first step but don’t stop there – make sure to pay all of your bills on time and don’t take on too much debt.

Being added as an authorized user or setting up a joint card (i.e. with a parent) is also a great way to build positive credit history. You might also consider opening a secured credit card account. That means you deposit money in a savings account that is tied to the card. If you don’t pay on time, the lender is protected – or secured – because they can withdraw payment from your savings account. However, they would still report the payment late, so be sure you always pay on time. If you do, you can build a positive credit history and start saving at the same time.

Myth #10:  Credit is a Measure of Your Value

Credit scores are designed to evaluate how big of a risk it would be to lend you money. That’s it. If your score is low, it’s because your credit history suggests that there’s a higher risk that you’ll default on a debt. It doesn’t mean anyone thinks you’re a bad person. Good, honest people can have low scores (and yes, truly awful people can have high scores). What you can do is work to generate a positive credit record: pay bills on time, reduce balances and apply for credit only when you need it.

You might be reading this because you are worried about how little you save money. Perhaps you don’t spend any money at all, or maybe you do save but quickly spend it on something. Setting up long-term savings is a good idea, as it can protect you and your future, and allows you to have a fall-back should you ever need it. It is a healthy way to manage your money, rather than living paycheck to paycheck.

However, getting started with saving money isn’t always easy. If you have very little left over at the end of the month, after all your bills, rent and other commitments, there may not be a whole lot left to save. Do not despair  – you are not the only one who feels like this.

In fact, online loans provider ‘Wonga’ see saving difficulties at the top of the list of their customers’ worries. They recently blogged about the annual savings challenge, which could help you to get your savings on the right track. They say, “The 52-week savings challenge is an excellent way to slowly grow your commitment to saving, which is something that doesn’t come naturally to us all. Following this challenge provides South Africans with a realistic and achievable way to save money, even in our tough economy and at the leanest times of year.”

Other outlets also praise the 52 week saving challenge. Money blog ‘The Balance’ explains the pros and cons simply, “You start by saving just $1 the first week of the challenge. Pop it in a jar on your counter without a second thought. The next week, put away $2, and the next, $3. You get the idea. By the end of the challenge, you are saving more than $50 a week, bringing your total amount saved to just under $1,400 by the end of the year.” Of course, it can be difficult when you get to the larger values, which is why some people decide to do the 52-Week Money Challenge in reverse, e.g. they save $52 in week 1, $51 in week 2, and so on.

Some people may also suggest just saving a fixed amount every month. However, this can prove difficult. Some months, after an unexpected bill, you might not have the money to put a larger amount away in your savings. Alternatively, others like setting up direct debits to automatically take the money at the start of the money so that there is no way out of putting some extra aside. Dedicating a specific savings account, which you do not touch is an ideal way of saving money that you don’t feel tempted to dig into!

Remember also that you can make small sacrifices in your daily life to help the savings challenge. What about cutting out that daily cup of coffee that you buy; the money you save can really add up. Equally, try to cut down on areas of spending at home, like turning off plugs and electric sockets that you don’t need.

It’s never too early to start thinking about your financial future. Even if you are a teen who is still in the process of figuring out what you want to do with your life, there are reasons why you need to start planning now. By beginning to think about your financial future, it’s possible to ensure the money is there when you need it. Investopedia provides some basics that you can start to employ right this minute and be secure all of your life.

Creating and Reaching Financial Goals

One reason why you need to start planning now has to do with goal setting. It’s up to you to decide what those goals may be. Perhaps you would like to own a home by the time you’re 30. Maybe you want to pursue a higher degree, like a doctorate. Start by learning how to set goals, including how to go about securing the resources to reach them. You may have to adjust or refine those goals as you get older, but that’s much different from having none at all.

Reserving Funds for Major Expenses

Another good reason why you need to start planning now for your financial future has to do with making significant purchases when you grow up. A home, a car, college, and even retirement are major investments that require cash. According to Your Quest, money management is more important than ever for young teens to learn, as retirement keeps becomes more and more expensive. Report indicate that Americans are living longer than they used to, and thus are needing more money in retirement funds to sustain themselves (sometimes needing up to 38 years of funds or more). Even if those expenses feel years away, now is the time to learn how to create a budget and live within your means. Make sure the budget includes line items specifically for each major expense.

Set goals for how much to tuck away each paycheck and stick with it. Remember to include a line item for emergency funds, since you never know what could happen. Along with watching the funds grow, you’ll learn a lot about avoiding overspending and stop yourself from going into debt.

Setting Up Savings and Investment Accounts

When you have at least a few goals for the future, brainstorm how you can begin working toward them now. On the financial front, this means learning to save money now and possibly invest in some manner. Hands on Banking reinforces, “opening a savings account is easier than ever before. All you’ll really need are forms of identification and a little bit of money to start your account with. Once that’s done, you can start planning more effectively for your future.” Start with simple plans like opening a savings account, then move on to setting up a certificate of deposit. The goal is to put mechanisms in place that allow you to earn interest on the money that you save.

In time, you will be old enough to make investments. Start with safe ones that are highly likely to earn some sort of return. As you become more comfortable with the market, it’s okay to allocate some of your money to options with higher risk and a chance for a higher return. As long as you maintain a solid financial cushion and learn not to invest more than you can afford to lose, you’ll be okay.

Ultimately, the habits you develop now make it possible to maintain financial well being and make life a little easier. As you accumulate wealth and achieve your goals, there will always be one more to set and reach. With your sound skills, there will always be a way to get where you want to go. Think about your finanical future today!

Do you know your credit score? Not many young adults can answer that question, and even fewer know why it’s even important in the first place. Think of credit scores as an entrance exam test score for adults. It tells potential lenders, insurers, landlords, and even employers about the type of person you are. A higher score opens opportunities to better rates, apartments, and some careers. You’ve probably got a lot on your mind planning your future, with a little insight and common sense, you can learn financial responsibility. Here are 5 tips to help you maintain a good credit score.

1. Understand Credit Score Math

A credit score is a three-digit number used to estimate creditworthiness. It ranges from 350 to 850. The formula used to calculate scores vary slightly between different credit reporting agencies, and while the exact formulas are closely-guarded secrets, some factors are easy to understand. Some of the most important and basic factors to maintain a good credit score are:

• On Time Payments – Solid payment history improves your score
• Debt Ratios – Keep recurring credit balances as low as possible
• Credit File Age – This factor always starts low and only time helps
• Inquiries – Too many credit applications damages your credit score
• Variety of Loans – Experience different types of credit to maximize your rating

Your score is a total of these factors, though some of the factors weigh a little heavier on your score than others. Know which factors impact your total the most, and adapt your habits to improve your score. Negative history items like collections, defaults, and bankruptcy penalize your result. Aim to keep your number above 720, because the higher your score is, the more financially stable creditors will see you.

2. Check Your Credit File Regularly

The Fair Credit Reporting Act entitles you to a free credit report from each reporting agency once a year. This report contains details about you, your accounts, and your payment history. While you can read your file for free, scores can cost extra. However, there are independent credit monitoring agencies that allow you to see your score once a month or more. While some of these agencies charge a fee, others are free. By using a credit-monitoring agency, you can catch incorrect or fraudulent activity and report it. To maintain a good credit score, always know what’s on your report.

3. Create Your First Budget

Make a budget and stick to it. Following a budget teaches you about your spending habits and behaviors and will help you maintain a good credit score in the future. Before you start taking out loans, it’s best to test yourself using your own money. If you’ve never thought about tracking your spending before, you might be surprised at what you learn and the trends you see.

Carefully track your expenses for several months and look for patterns. Compare your results to your existing income. Never spend more in a month than you earn, and get into the habit of saving money now. Say no to things you don’t need. If you’ve done your homework, you know what you can afford and what you can’t.

4. Minimize Your Debt Burden

From a lender’s point of view, a high level of existing debt makes it more difficult for a borrower to manage new loans and pay off all their debt. This is why it’s so important to minimize what debt you have. If you don’t need to take out a student loan, find another way to pay for school, because even if you can make the monthly payments for the next five or ten years, the high principal will show up on your credit report and will affect your creditworthiness.

Avoid new debt and pay with what money you have available first. If you’re in college, apply for scholarships or work a part time job. Put high down payments on cars and only use credit cards for emergencies. Pay debt off quickly. The lower your debt ratio is (how much you can borrow versus how much debt you have), the less risky you appear to a lender and will help maintain a good credit score.

5. Use Cash Whenever Possible

Just about every commercial business looks for a way to exploit impulse buys. For example, the checkout lane at the grocery store is loaded with overpriced merchandise. Stores put these items within easy reach and hope you’ll grab them, and many people do.

Credit card companies take advantage of impulsive behavior as well. It’s a well-documented fact that people spend carelessly with credit and even debit cards. The convenience of plastic lends itself to high debt burdens, but if you’re handling physical cash, it’s often harder to let go.

With a little insight and some planning, you can keep your credit score high, even if you know practically nothing about finances. Stick to the basics, and over time, you’ll be able to maintain a good credit score and have no problem getting approved for any loans you may need later in life.

Sources
https://www.creditcards.com/credit-card-news/help/5-parts-components-fico-credit-score-6000.php
https://www.gottabemobile.com/best-budget-apps/
http://www.creditkarma.com/
https://m.wgu.edu/online-business-degrees/accounting-bachelors-program.html
https://www.usa.gov/credit-reports

So your allowance (if you get one) is not enough and you want to make more money. Don’t we all?

While some of you can’t work yet until you hit a certain age, there are still other ways to get some extra cash. Read my wonderful list to see what kinds of jobs you can easily do!

First, a few tips:

Tip 1: Do Your Research

Doing your research is important. Nowadays, anything and everything you need more information on can be found on the Internet. Look for sites that will let you work from home or find local places that can be easily traveled to. Try to find something you can do over the weekend – as long as it doesn’t interfere with school. Be careful when looking on sites like Craigslist, though you may find something you’re interested in doing, make sure to share this information with your parents. Your safety is important, and Craigslist is full of weirdos. Better to try a site like WAHM.com, which features a lot of work at home jobs, such as blogging.

Tip 2: Keep your options open

You don’t necessarily need to stick to having only one job. You can babysit on the weekends and tutor during the day. Keep your options open and don’t be too picky either. No one said making money would be easy and sometimes you just have to sacrifice hanging out with your friends to do some chores around the house that your parents are paying you for.

Tip 3: Don’t be a quitter

So you don’t like mowing the lawn…it’s really up to you whether you want to continue doing it, but remember what you’re doing it for. If you’re really trying to save up, then you know what you need to do…don’t quit. Sure, if you really want to switch things around you can, but don’t drop something only because you’re too lazy to do it. Working hard earns great rewards – in this case you’d be earning money, which is exactly what you’re here to get.

Now let’s get to the nitty-gritty: below are some things you can do to earn money as a teen!

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Any type of “Sitting”

What I mean by that is housesitting, babysitting, dogsitting, plant sitting and whatever else type of “sitting” or “watching over.” Trust me, I’m sure you have relatives or neighbors who need you to keep an eye on their house, water their plants and babysit their kids while they are out for the weekend. This is a great and easy way to earn cash!

Sell stuff online – Ebay, Amazon, Poshmark

Selling stuff online is a great way to make some extra cash. On top of that, it helps de-clutter by cleaning out your closet! Sell things you don’t need anymore. Use sites like Ebay, Amazon or Poshmark to post your items. Take clear photos of your things, write a description for your item (use some great adjectives to describe it – entice your buyers), do some research of how much your item is selling for from other sellers, and then choose your shipping methods.

Garage sales

If you don’t have the time to sell things online, a great alternative is by having a garage sale. Start gathering your things, make and post flyers around your area (careful — some places forbid this) and on Craigslist. Timing is really important! People usually go to garage sales early in the morning to get the good stuff. You know what they say, “The early bird catches the worm.” Don’t forget to also have a lot of change since people tend to pay with small bills and quarters.

Blogging

You don’t have to be a “professional” writer to blog. You can write about almost anything and there will be sites out there where you can post and gain visibility. Do your research on sites that will pay you for your creativity and thoughts. One article I’d like to share is called  “20 Sites To Get Paid For Writing and Blogging.” Check it out!

Tutor/Lessons

Do you have a specific skill that you’d enjoy teaching? If so, tutoring might be for you! Whether its teaching your neighbor’s kid how to do algebra or teaching them how to play an instrument, you can easily make some money.

Background actor

Have you ever wanted to be on a TV show? Well it’s possible. You might not get to talk to the actors but you can definitely get paid to be on set as an Extra. Extras are those people in the background to help create the atmosphere or environment for the show or a particular scene. You can research places that hire background extras. You don’t need experience. If you have different skills and talents, they’ll definitely want to know that! It can be anything from juggling, riding a bike, gymnastics, playing the guitar and the list goes on. Who knows, you might become a featured extra meaning you’ll get paid a bit more than the standard rate. If you live in the Los Angeles area, try out Elite Kids Management, Kids Management or Central Casting depending on your age. You will need a parent or guardian’s permission of course.

Chores

Yes, I said it…CHORES! Simple enough right? Ask your parents and relatives if they need anything done around the house. You can wash dishes, vacuum the house, walk your neighbor’s dogs, do the laundry, throw out the trash, clean the gutters, wash the car, or teach your grandparents how to use social networking platforms like Facebook. Mowing the lawn is also an easy job to get because a lot of people own houses and believe it or not, some would rather pay people to mow their lawn instead of them doing it themselves. Take advantage of that and start asking friends, family and your neighbors!

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By Kristen Marquez.

Kristen Marquez graduated with a B.A. in Cinema & Television Arts from California State, University Northridge with an emphasis in Television Production. She is a social media coordinator by day and a content creator by night. With her great imagination, she knows she will create the next big thing whether it’s a script, a product or a simple idea that will fill people’s hearts with joy and entertainment. She blogs for a hobby and loves spending time with her golden retriever Lily.