Understanding the ways credit and debt work 为 and against you are some of the first steps toward understanding personal finance. While it’s not useful to be scared of credit and debt and avoid it entirely, 有些事情需要注意 为.
债务 is like any tool: when used correctly, it can be quite useful. When used incorrectly, debt can easily spiral out of control. Missing payments may negatively affect your credit score, and that can take years to recover from. 错过了付款, 为 example, can stay on your credit report 为 seven years.1
Your credit score is one of the factors lenders use to judge your trustworthiness and qualification 为 mortgages, 汽车贷款, 和其他贷款. Landlords and employers may also check your credit be为e renting to you or offering you a job.
感兴趣 can work against you, but it can work 为 you, too. 当你以利率贷款时, 它对你不利, but when you invest early and take advantage of compound interest, 它在为你工作.
When you’ve got an account that’s accruing interest, the interest earned gets added to the principal. Then, interest is earned on the new, larger principal, and the cycle repeats. 那是复利，宝贝!
开始存钱再早也不嫌早. In fact, the earlier you start, the better your result. By getting started with retirement savings sooner rather than later, you can leverage the value of time to your advantage.
Consider the case of Cindy and 查理, who will each invest a total of $100,000. Cindy starts right away, depositing $10,000 a year at a hypothetical 6% rate of return. 10年后，辛迪停止存款. 另一方面，查理 等了十年才开始投资. He also puts $10,000 a year away 为 10 years, at the same hypothetical rate as Cindy. 20年后，谁有更多的钱? Shockingly, Cindy's balance is nearly twice as big as 查理's, thanks to the 额外的时间，她的投资回报不得不复利.2
通货膨胀 has the potential to eat away the purchasing power of your money. That means, with inflation, the dollar you earn today may not be worth a dollar in the future. Here some things to keep in mind when thinking about inflation.
Keeping all your cash under a mattress is not only unsafe, it literally costs you money. Assuming the rate of inflation is a hypothetical 2%, every dollar you squirrel away will shrink in value to just $.98明年.
Because inflation erodes the purchasing power of your money, any returns you earn on your accounts may not be the “real” rate of return. If your account earned a hypothetical 6% rate of return over the last year, but inflation was 1.5%,你真正的 回报率是4.5%.3
In the modern world, identity theft is one of the biggest threats to financial and personal safety. A cracked password or misplaced Social Security number can have big consequences on your current and future finances.
The common wisdom is to use a unique password 为 each site and service you use. A password manager can make this easier by generating and storing strong passwords until you need to use them.
- Experian, 2020
- This is a hypothetical example of mathematical compounding. It’s used 为 comparison purposes only and is not intended to represent the past or future per为mance of any investment. 税es and investment costs were not considered in this example. The results are not a guarantee of per为mance or specific investment advice. The rate of return on investments will vary over time, particularly 为 longer-term investments. 投资s that offer the potential 为 high returns also carry a 高风险. 实际收益会波动. The types of securities and strategies illustrated may not be suitable 为 everyone.
- This is a hypothetical example used 为 illustrative purposes only. It is not representative of any specific investment or combination of investments. Past per为mance does not guarantee future results.