Financial fundamentals 101

Whether you are still in high school and just cashing in your first paycheck or in college working a part-time job, it is essential to start building a strong financial foundation now, not later. The earlier you start getting smart about money, the less stress and more financial freedom you’ll have down the road.

So, what financial fundamentals do you need to know? Consider this your guide on all things finances—from budgeting and saving to credit and investing.

What are financial fundamentals?

You might be wondering—what exactly are financial fundamentals? In short, it’s a fancier term for basic money skills that everyone should know. It refers to understanding the key concepts and everyday habits that help you reach your financial goals and make informed decisions regarding money.

These fundamentals include:

• Budgeting: Knowing where your money is going
• Saving: Setting money aside for short-term and long-term goals
• Credit: Using borrowed money responsibly
• Debt Management: Understanding different types of debt and how to pay them off
• Investing: Growing wealth over time
• Planning: Creating a game plan so you have less stress and more control

It’s never too early—or late—to start learning these fundamentals. Whether you’re working a part-time job or just figuring out how to stretch your savings through the school year, adopting these habits now can help you feel more confident and in control of your finances.

The basics: budgeting, saving, spending

Let’s start with the basics. When it comes to having money and building your wealth, you need to know how to budget, save, and spend smart.

Budgeting and saving

Despite how you might feel about budgeting, it’s not a punishment. It’s freedom. Think about it like this: you’re on a family trip and decide not to make any dinner plans so you can “go with the flow.” Now it’s 8 p.m., your sister wants seafood, your dad wants pizza, and you’re craving burgers. After arguing and realizing that everywhere is packed, you end up at a chain restaurant serving food you could’ve eaten back home.

There is freedom in planning. If you’d taken five minutes to look up a few great spots and made a loose plan, you could’ve had a way better experience. Budgeting works the same. It’s all about being prepared so you’re not stuck scrambling.

When you decide where your money goes, you’re in control. You can say, “I’ve hit my takeout limit for the month,” or “Awesome, I spent less on groceries than I expected!”

You can start small—even if it’s just tracking how much you spend and how much you save. Then, break it down into categories like gas, food, rent, and “fun money.”

Smart spending

When it comes to spending, one of the most important habits you can build is learning to identify your needs from your wants. Just because you have money in your account doesn’t mean you have to spend it.

Let’s say you earn $2,000 a month. Even if you save $500 of it, that doesn’t mean the remaining $1,500 is up for grabs. When you spend just because it’s there, it often leads to impulse purchases and a whole lot of asking, "Where did my money go?" So, before you buy something, ask yourself:

• Do I really need this right now?
• Will I still want this a week from now?
• Is this aligned with my budget?

Where should your money live?

Now that we’ve discussed the importance of budgeting and saving, let’s talk about where you should keep all of this money. If you’re earning a steady paycheck, it’s probably being directly deposited into a checking or savings account. It’s important that you have both.

• A checking account is money that is readily available to use. When you swipe your debit card, it comes straight from this account.
• Your savings account is for setting aside money you don’t plan to touch right away. Pro tip: allocate a specific amount that goes into savings with every paycheck, leave it there earning interest until you are ready to use it.

Is a savings account the same as an emergency fund?

Not exactly. While both technically live in a savings account, emergency funds should only be used for true emergencies—like a flat tire or medical bill you weren’t anticipating. Consider opening a savings account just for your emergency fund; keeping saving for something fun and something unexpected completely separate.

Understanding credit

Ah, credit cards. You’ve probably heard the good, the bad, and the horror stories that come with them. The truth is: credit cards can be a helpful financial tool—and they can also land you in some deep debt. So, what exactly is credit? It’s borrowed money that you agree to pay back—usually with interest. When you swipe a credit card or pay a student loan, you are building a credit history.

But if you don’t pay it all back, it starts to affect your credit score. Why does this credit score matter? Because it can actually affect whether you’re approved to rent an apartment, get a mortgage, or buy a car.

Credit shouldn’t be something you fear, but rather something you understand. Here are the pros and cons:

Start investing*

The thought of investing can be overwhelming to many, especially when you hear terms like stock, bonds, and funds. However, once you learn the basics, investing can be incredibly rewarding. A common misconception is that you need to have thousands of dollars to start, but the truth is, you can start with as little as $10.

How to start building wealth now

Your game plan doesn’t have to be perfect, it just has to work for you. The key is to just start wherever you are, with whatever you have. Here are some quick tips to help you build wealth now:

• Track ALL of your spending through an app or spreadsheet.
• Pick up a side hustle—whether it’s tutoring, pet sitting, freelancing, or selling handmade items—to earn additional income.
• Take advantage of your school’s financial resources, such as advisors or financial workshops.
• Set short-term and long-term financial goals, breaking them into weekly goals to help you realistically get there in the time you want.
• Automate your savings. Even if it’s only $25 a month.

Your (financial) future is in your hands

Financial success is about being prepared and being smart. Even if you just start by learning and understanding these financial fundamentals, that’s a step in the right direction. The earlier you start to build habits around your finances, the more confident and less stressed you’ll be down the road.

Planning for your financial future? See more resources, tips, and insights. You can even check out a webinar on financial basics for more budgeting tips from the comfort of your own home.