Personal Finance 101

Student loans, credit cards, car loans, and mortgages weigh on Generation Y. What does the mounting debt for these young adults mean for the economy?

Our relationship with money is complicated. Most of us wrestle with the best ways to spend, save and invest. But many of us are afraid to ask questions about money we think we should already know the answers to. So, for a guide to what you should know about money, Michelle Singletary, a personal finance expert and nationally syndicated columnist with the Washington Post, helps some curious callers get back to the basics.

Michael in Los Angeles has a checking account, knows how to check the balance and when he has enough money to withdrawal, but what's a grown up out on their own really need to know about money? 

Singletary says there's nothing wrong with asking his bank for help. "They understand that this is a complicated thing for a lot of folks." Asking something as simple as, 'can you help walk me through everything I need to know?' would help consumers know what to look out for when it comes to potential pitfalls.

"I also want him to start an emergency fund," says Singletary. "Banking encompasses not only your paycheck, but also how you plan for the future."

What's the best, simple way to get yourself started on a budget for the first time? "Whatever you make, spend less. Most people live beyond their paycheck, it's just really key to be financially smart." The next step is to plan your savings in advance. "The first thing that comes out of my paycheck isn't my mortgage, it's savings. My retirement, my kids college fund, my [emergency] fund," says Singletary.

To hear answers to questions like how much to save for retirement, how to find a financial adviser, and how credit scores are calculated, click the audio player above.

About the author

Adriene Hill is a senior multimedia reporter for the Marketplace sustainability desk, with a focus on consumer issues and the individual relationship to sustainability and the environment.
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I concur with Greg as to her lack of expertise, and hope you will do your listeners a favor by not having her back. For me, her 2 worst blunders were:
1) pay off student loans before start saving. Because some opportunities are "use it or lose it" like IRA and 401k contributions/matches, almost always it would be best to do those before curtailing student loans.
2) close credit card(s). While the woman shouldn't open any new accts, which will reduce her FICO score, she should either put the unneeded card in bottom of a drawer, or cut it up but not close the account.
While Ms. Singletary is a bubbly speaker, her advice is seriously lacking.

Sorry, but not impressed with Michelle Singletary' depth of knowledge/sharing, and the lack of inquiry by Adriene Hill. I like concept we need to talk about our fear of money. I think it would be good to hear: (1) one needs to save 8-10% for retirement. Is this a percent of take-home pay or gross. I think it should be much higher for people over 50 who've been hurt by recent market downturn, (2) It was mentioned people only pay 30 -33% towards housing, does this include utilities, condo-association dues, property insurance and property taxes or only 30-33% on the P&I or rent? I'd be curious what percent of Americans even are in the 30% standard, (3) should a comment be made that a young man didn't know what is an escrow or investing? What are we (not) teaching in high schools? (4) relatedly, a caller said she had 7 or so credit cards; why? If she does pay them all off monthly, great and I hope she keeps them open even if she doesn't use the cards as in the long term zero out-standing balances may help build the FICO score; but then why does she need so many cards and why can't she only use 1 or 2? Seems to me if her purse was stolen she'd have huge head aches in closing/reclaiming that number of cards. For future shows, I'd like to hear topics like: 1} what are good calculators for setting aside retirement funds and why shouldn't people first open a ROTH, than a traditional IRA, 2} what are good ways to budget, 3} in today's economy is a 6, 9 or even an 18 month emergency reserve adequate; 4} Ways to talk w/ your future partner or current partner on finances, 5} Nice ways to inform friends you can't do 'X' because you don't have that type of entertainment fund, 6} Is there an advantage to roll old 401Ks into one IRA or into a current employer's 401K; 7} should people under 40 start buying long term care insurance yes/no and how to assess such plans, 8} Bring in more Psychologist to help listeners feel good about how not to spend so one's identity is not focused on just how one looks, if they wear used-clothes (allowing of course to wear 'decent clothes' at work), 9} does it really make sense for most Americans to buy/own residential homes since most workers likely will not stay in one geographic location longer than 10 years so why incur closing costs and down-payments unless offset by income tax refunds and I also don't think that residential R/E will not increase in value as much as it has in the last 40 years because I don't see common wages increasing much and thereby people won't be able to afford increasing prices, 10} Talk realistically about types of jobs students with BAs in non-STEM degrees reasonably can expect to find - as I see a huge increase in incomes due to higher paid jobs will be in STEM, yet job growth will greatly increase in more service and lower paid healthcare related jobs, 11} I think promote reasons why everyone NEEDS to buy into the insurance pools since even teens don't know if they might succumb to a car accident or even a cancer/leukemia which can easily cost several hundred of thousands a YEAR. Lastly, in future shows I'd like to hear more on how the US economy is global and therefore who can an average American know they are 'safely' invested to participate in the global econ?

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