As the title says, I’m turning 18 soon and want to get a jump on my finances. I’ve been working consistently since I was 14 with only 2 job changes. I’d say I have a solid work ethic along with managing school. While it may not be a lot compared to adults, I bring in 2k a month as a full-time high school student.
I want to build good credit so I can buy a newer car before heading to college in August. By newer, I mean something like a 2010+ Toyota or Ford priced around 6-8k.
Landyn said: @Sophia2
I haven’t heard of Citi Double Cash before. I’ve looked up the best credit cards to use and Discover It seems pretty popular.
With a new credit profile, your options are mostly Discover Student, one of the Capital One student cards, or Chase Freedom Rise. Secured cards should be a last resort.
Citi likely won’t consider you with no credit history.
Landyn said: @Sophia2
I haven’t heard of Citi Double Cash before. I’ve looked up the best credit cards to use and Discover It seems pretty popular.
Discover is popular among students. Most ‘grown-up’ cards give you 2% back one way or another. But don’t stress too much about that; you shouldn’t be spending enough for 2% to mean much.
It’s great to keep your first card for a long time. I’d recommend something from Capital One, Chase, or Citi and then upgrading while keeping the history.
Credit cards aren’t free money; you must always pay them. Only use what you can pay the following month. No matter how tempting, don’t use credit to cover bills you can’t afford with cash. That leads to a bad credit score or worse.
Best advice… use your credit card wisely and don’t let it control you. Only spend what you have, not what you think you’ll have!
Also, look into opening a Roth IRA to invest whatever extra money you earn. Consider investing in an S&P 500 or low-cost index fund. Keep doing that and pay yourself first.
Be smart about the car purchase. Go for function over fancy features. Beyond getting from point A to B, a car shouldn’t be a way to waste your finances.
Landyn said: @Evans
I could look it up, but it’s easier to ask you to explain. What’s a Roth IRA or S&P?
A Roth IRA is a retirement savings account where your investments grow tax-free. S&P refers to the top 500 companies in the U.S. You should open a Roth IRA and invest in the S&P.
Landyn said: @Evans
I could look it up, but it’s easier to ask you to explain. What’s a Roth IRA or S&P?
A Roth account is a great investment tool. You can save up to $7,000 based on your earned income. All your gains will be tax-free! Just remember that you can’t take out the gains until you’re 59 and a half, or you’ll face a penalty, which is fair. Other countries don’t offer this benefit.
More important than how much you put in is how early you start. Open an account for free with places like Fidelity, Vanguard, or Schwab. Each is good. Fidelity has a nice platform, and Vanguard offers popular funds like VOO and VTI.
Never think your savings are too small to matter. If you can’t reach the $7k limit, save $100. Think of it as buying your financial freedom at a low cost.
Also, don’t panic during market drops. If values fall, invest more. Don’t sell out of fear during a recession. Stick to your plan. For the next 30+ years, just focus on equity index funds.
Don’t carry a balance, avoid cards with annual fees, but get one that fits your needs. My first card had no annual fee and no foreign transaction fees. It worked great and is still my go-to card for travel.
Are your parents financially savvy? If they pay off their credit card monthly, they could add you as an authorized user. This will improve your credit score significantly if they have a long credit history.
@Tarian
Maybe too much info, but my dad has been fired from several jobs and is not on a stable income. My mom is responsible with money, but we don’t really communicate.
Edit: Even when I’ve asked her for help, she says I need to learn on my own.
@Landyn
Sorry to hear that. You should download Credit Karma to track your credit score over time. When you turn 18, get a starter card, ideally through your bank. This could be a secured or unsecured card, but it should not have an annual fee. Only use it for what you can pay in cash, and set up autopay to avoid missing payments.
Building a credit profile takes time. Do you have any student loans or other loans?
Honestly, with your timeline being only until August, you might just want to save for the car and buy it in cash so you don’t have to worry about credit.