Should an 18 year old with their first job get a debit or credit card?

I am 18 years old and just landed a minimum-wage job. I am also starting college in the fall. I'm not informed on anything financial. I don't know about credit or debit cards, and I don't always have money because I'm working part-time and going to college. I'd like to start building my credit, but if I don't have the means or it wouldn't be a good idea, I'm fine without getting a credit card. Which kind of card is recommended to me?

Personal Finance, Starting Out
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July 2017

I love it when I hear young adults your age that want to learn how to control their money. You are putting yourself in a great position to become wealthy and I applaud you for it. Actually, I am just started with a new client of mine. She is 19 and wants to make sure she is financially savvy. So I will give you the same advice I am giving her:

I wouldn't advise you to get a credit card. Here's why:

You have plenty of time to build your credit. I believe establishing solid financial habits is much more important for you right now. Too many people get into trouble using credit cards these days. If I were you, I would try to avoid these problems because they are a mess!!! Once you have good habits, which you will gain with practice and time, you may start to use them with caution.

Here's how I help my clients deal with their budget.

You should have 2 checking accounts. One that gets your direct deposited paycheck. This account is your main account and should be used to pay monthly bills (if you have any). Then the second one is tied to your debit card. I call this one your lifestyle account. You should set-up an weekly automatic transfer from your main checking to your lifestyle checking account. Let's say you decide that $75/week (which could be half of your paycheck) is enough for you to have some fun with. This money could pay for movies, food, clothes,... Anything that you could delay if needed. The idea is that once your account is empty, you have to wait until next week for your next purchase.

If you keep doing that, before long your main checking will accumulate a good amount of money that you could use for things you planned to buy (like a car... by the way, always buy a car you can afford to pay cash for), or you could start investing to grow your money. This is a simple trick to help you build wealth!

If after a few years, you are getting good at this, then you can start building your credit.

I hope this helps.

July 2017
July 2017
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July 2017