As a teen or young adult, you may be starting to take more control over your finances. You may have a part-time or full-time job, are planning for college expenses, or live on your own. Understanding the basics of finances can help you both now and for years to come. Living with a blood or bleeding disorder can be expensive, and it is never too early to start planning for a solid financial future.
This section of Finance Basics covers:
Where Should I Start?
Not everyone owns stocks or bonds. Many people get the money for the expenses they need by working. You may already be working a full-time job or a part-time job. You could also be getting an allowance or other money from your parents or caregivers. Below is information on what to do with the money you have earned or received.
Budgeting is an important financial skill to develop. Budgeting is creating a plan for your income and expenses. Start by making a list of all sources of money, such as your job, allowance, or any other money you receive. Then list all of your expenses. Expenses can include school costs, housing, food, car or travel costs, and entertainment. Subtract your expenses from your income to see how much money you have left over each month. Use this amount to set aside money for savings, emergencies, or other financial goals.
Saving money is an important habit to develop, no matter your age. Start by setting a savings goal, such as saving for a new phone, a car, or college. You can create a savings plan by setting aside part of what you earn each month. You can save money in a bank account or invest the money. It is important to remember that saving money can be hard, so be patient and stay committed to your goals. If you have been working for some years, you can also put your savings into an emergency fund. An emergency fund can help if you need money for a medical issue from your blood or bleeding disorder. Figuring out how to build an emergency fund isn’t always easy. In 2022, the personal savings rate was 3.7%.1 This means people save only 3.7% of overall income. For people with blood or bleeding disorders with high medical expenses, savings can be dangerously low.
If you want more information on dealing with medical expenses, please go to Living With Illness Tip Sheet—Finances.
When you borrow money and promise to pay it back you are using credit. As a young person, you may be thinking about applying for your first credit card. It is important to use credit responsibly and avoid getting into debt. If you don’t pay your credit card off each month, then you will be charged interest. If you don’t pay at least the minimum every month, then you will pay late fees. Only use credit if you can pay it back.
In 2022, the average American carried $101,915 of debt.3 The debt includes credit cards, mortgages, car payments, and student loans. Those that cannot repay debt may turn to bankruptcy. This is a legal process for those that cannot pay their debt to find relief. A study in 2007 also found 62% of all bankruptcies were medical.2 Avoiding bankruptcy is a good reason to try to stay out of debt in the first place. Although having a blood or bleeding disorder can be expensive, by budgeting, saving, using credit wisely, and having good health insurance, you can avoid going into debt.
What is Retirement?
You might wonder why you should think about retirement now as a young person. Since people with bleeding disorders are living longer, healthier lives, you may spend more years in retirement. Retirement is the period of your life when you stop working and rely on your savings and investments for income. The earlier you start saving for retirement, the more time your money has to grow. It is important to plan ahead for retirement and be financially ready.
Know Your Retirement Accounts
There are different ways to save for retirement. These are called retirement accounts. Below are some types of retirement accounts or benefits:
This is an employer offered plan and these plans provide a specific amount of money every month for the length of the retirement.
Employer offered and funded by contributions from employees. They can be matched by the employer and grow through investment in mutual funds.
These are Individual Retirement Accounts (IRA) and Roth IRAs. They are for individuals and often grow through stock market investments.
This is the government program that most Americans pay into with every paycheck. When you reach the eligibility age, Social Security pays you a monthly benefit based on the number of years you worked and the amount you contributed to Social Security.
- BEA. (2023, February 24). National Data: National Income and Product Accounts. Bureau of Economic Analysis Interactive Data Application. https://apps.bea.gov/iTable/?reqid=19&step=3&isuri=1&1921=survey&1903=76
- Himmelstein, D. U., Thorne, D., Warren, E., & Woolhandler, S. (2009). Medical bankruptcy in the United States, 2007: results of a national study. The American Journal of Medicine, 122(8), 741–746. https://doi.org/10.1016/j.amjmed.2009.04.012
- Horymski, C. (2023, February 24). Average Consumer Debt Levels Increase in 2022. Experian. https://www.experian.com/blogs/ask-experian/research/consumer-debt-study/