Figuring out money is hard. Sometimes you just want to not have to think about it, worry about it, or plan for it. WHY CAN’T EVERYTHING JUST BE FREE?! This is how life should work: you see the perfect pair of shoes, you try them on, and then you take them home. Simple as that. Another acceptable scenario is that you magically get tons and tons of cash delivered to your doorstep every morning to spend however you please. “Hey, President Obama, can you get on that? Thanks.”
Most people don’t like to talk about money- it’s sort of a taboo subject (gauche if you will.) However, if you never learn about it, you’re going to suffer later in life. Like most things, denial only works for so long. Let’s look at yours truly as a cautionary tale: I’m currently racked with a credit card debt from when I quit my office job in order to write and act full-time. Looking back, there are some things that I wish I had known that would have made my current situation more doable. Knowledge is power! *the more you knoooooow*
Here are some things that you didn’t know you needed to know about money:
1. The difference between a 1099 and a W2
When you get your first job (and any subsequent job), you need to know whether you are a 1099 or W2 employee. 1099 means that you are a “independent contractor” – no taxes will be taken out of your paycheck, but you’ll be responsible for paying a lot more in taxes when you file. You will fill out a W9 form at the time of hire. These types of jobs are usually project-based and done offsite.
W2 means that you are an employee of the company and that payroll taxes are automatically deducted from your paycheck. You’ll fill out a W4 at the time of hire and have benefits like insurance, vacation pay, and sick pay.
Why is it important to know the difference? If you’re a 1099 employee, you need to make sure to keep any kind of receipt that you can write off, because you’ll need to plan for the large amount of taxes you’ll be responsible for come February. Also, some companies may be taking advantage of you by hiring you as independent contractor when you should legally be W2 employee (meaning you should be getting the benefits, etc.) Being aware of the difference can help you fight for your rights in these instances. Learn more here!
2. How to Pay Taxes Online
It’s important to know the basics of paying taxes, as it can be stressful when you have to pay it for the first time. Keep track of your pay stubs and work-related expenses throughout the year to make it easier come February. If you have a simple situation (i.e. one job as a W2 employee), it’s easiest to pay your taxes online for free through sites like Turbotax or H&R Block.
3. What a 401 K is
401K is a portion of your earnings that are taking out or your account and put into savings for retirement. This money is not taxed – woohoo! I’m sure retirement seems forever away, but it’s never too early to start planning. (Yes, I know I sound like a dad right now.)
4. How to make a budget online
Budgets are so important. Can I say it again? BUDGETS ARE SUPER IMPORTANT. The sooner you get in a habit of creating a budget and sticking to it, the more financial freedom you’ll have in your future. Luckily, technology makes budgeting easier than ever. Mint.com , Mvelopes, and the app Level Money are free online budgeting resources that automatically get information from your bank and categorize your spending. They are very easy to use- start getting used to creating budgets online!
5. How to establish credit
You’re going to need a credit history to rent an apartment or get a car after high school. You don’t want to wait until the moment when you need one of these things to think about it! There are a few ways you can do establish credit including getting a credit card, keeping a low balance on it, and paying it on time monthly. Want to learn more? Nerwallet.com is a great resource.
6. What bank fees you may be subject to
No one wants to get hit with a bunch of fees because you didn’t know there were rules you needed to follow. Some banks penalize you for not having enough in your savings account, for over drafting your account, for bouncing a check… the list is infinite.
7. How to pay off credit cards
Credit cards feel like free money at first, but you’ll quickly learn that they come back to bite you in the butt if you’re not careful. The longer you have a large balance on your card, the higher the interest rate for said card will go. (The interest rate is the percentage of the money on the card that the bank charges you each month.) Setting up automatic payments of your credit card is a great way to avoid forgetting to pay and therefore getting hit with a higher interest rate.
8. How to ask for a raise at work
Women are paid less than men in the workplace, so it’s important that you know how to be assertive and ask for the money that you deserve. The important thing is to demonstrate how you add value to the company, show your appreciation for your employer, and practice beforehand. GET IT, GIRL! The Harvard Business Review has a great guide for asking for a raise.
9. How much you need to have in emergency savings
Having an emergency savings fund is probably more important than getting that cute felt hat you’ve been eyeing. Generally, it’s recommended that you have three to six months of expenses saved. If you have health concerns, an unstable job, or no one to lean on in case of a major problem, you may want to set aside more. Put that money aside and don’t touch it!
10. How to file for unemployment
You should know how to file for unemployment BEFORE you start panicking and realize that you’re in a horrible position and have no idea what to do. You are going to be eligible for benefits if you are unemployed through no fault of your own and you’ve earned the qualifying amount of money as a W2 employee in the past 15 months.
Applying for unemployment is easy to do online through your state’s website. Just google then name of your state and “unemployment” and the site will pop up. You will need payment records of the 15 months of your employment history before you can complete the application. The longer you wait, the longer you don’t have dat money!
11. How to negotiate your starting salary
If you don’t know how to negotiate your starting pay, you’re probably going to be earning a lot less than you could have. Want to hear a scary statistic? Linda Babcock in her book Women Don’t Ask said only about 7% of women attempted to negotiate their first salary, while 57% of men did. YIKES. Do you research and know how much the job pays and be willing to walk away if they can’t meet your requirements. This is tricky, so check out these 37 tips for navigating this issue!
12. How student loans work
Chances are, if you’re going to go to college you’re going to be taking out some kind of student loan. Don’t go in blind- do your research ahead of time. Understand how much you are going to have to pay monthly after you graduate. Another option (what I did) is to look into affordable college options. For example, I was able to go to school for free because I went instate and and worked hard to be in the top 5% of my graduating high school class.
Do you have any money tips you want to share with us? How many of the items above did you already know? Let us know in the comments below!