What a budget is for

Money comes in, and money goes out. Income is everything coming in: pay from a part-time job, money from babysitting or mowing lawns, gifts, an allowance. Expenses are everything going out.

Without a plan, expenses tend to grow until they match whatever comes in, and saving becomes "whatever's left at the end of the month", which is usually nothing. A budget flips that around: you decide ahead of time how much goes to each part of your life, so the things you care about get funded first.

You don't need a lot of money to budget. The habit matters more than the amount, and it is far easier to learn on a $300 paycheck than on a $3,000 one.

Needs, wants and savings

Almost every expense falls into one of three groups:

• Needs are the things you'd be in real trouble without: rent, groceries, a phone bill you're responsible for, gas to get to work.
• Wants make life better but aren't essential: eating out, concert tickets, new clothes beyond what you need, streaming services.
• Savings is money set aside for the future: an emergency fund, a goal like a car or college, or investing.

Some things sit in between. A phone may be a need; the newest phone is a want. Transport to work is a need; ride-shares when the bus would do are a want. Be honest with yourself about which part is which.

The 50/30/20 rule

A popular starting point is to split your take-home pay into 50% needs, 30% wants and 20% savings. It's not a law, just a sensible default that's easy to remember.

If you live at home and your family covers most of your needs, your "needs" share might be much smaller than 50%. That's an opportunity: put the difference into savings. Someone who saves 40% or 50% of a part-time paycheck in high school can build a real head start.

Track what you actually spend

A budget is a plan; tracking tells you whether you're sticking to it. For one month, write down every purchase: a notes app, a spreadsheet or your bank's app all work. Then sort each one into needs, wants or savings and compare with your plan.

Most people are surprised by small, repeating costs. Three subscriptions at $12.99 a month is $38.97 a month, which is $467.64 a year. None of them feels expensive on its own.

Pay yourself first, and keep an emergency fund

Pay yourself first means moving your savings out the moment you're paid, before you spend on anything else. If saving waits until the end of the month, the money tends to be gone. Many banks let you set up an automatic transfer on payday, so you don't even have to decide.

Part of that savings should be an emergency fund: money kept for surprises, like a car repair or a cracked phone screen, so a bad week doesn't turn into debt. Adults are often advised to aim for three to six months of expenses. As a student, start smaller: even $200 to $500 set aside covers a lot of surprises.

Gross pay and take-home pay

When a job pays "$16 an hour", that's your gross pay: what you earn before anything is taken out. If you work 30 hours in a pay period, your gross pay is 30 × $16 = $480.

What actually lands in your bank account is your net pay, also called take-home pay. It's your gross pay minus taxes and any other deductions. The gap between the two surprises almost everyone the first time.

This is why lesson 1 said to build your budget on take-home pay. You can't spend money that was never deposited.

What gets taken out

Your employer is required to hold back some of your pay and send it to the government for you. This is called withholding. For most jobs, it includes:

• Social Security: 6.2% of your pay. This funds retirement and disability benefits. It applies to earnings up to an annual limit that's far above what a part-time job pays.
• Medicare: 1.45% of your pay. This funds health insurance for people 65 and older.
• Federal income tax withholding. An estimate of the income tax you'll owe for the year. The amount depends on how much you earn and what you put on your W-4 form (more on that below). On a small part-time paycheck, it may be very little, or even zero.
• State income tax, in most states. A few states have no income tax on wages, and some cities add a local tax too.

Social Security and Medicare together are called FICA, and they add up to 7.65%. Unlike income tax, FICA is a flat percentage, so it comes out of nearly every paycheck no matter how small. Your employer also pays a matching 7.65% on your wages, which you never see.

Some jobs take out other things as well, like a share of health insurance or contributions to a retirement plan. Those are usually choices you make when you're hired.

Try the calculator below. Enter an hourly wage, the hours you work each week, and a guess at your income-tax withholding (federal and state together) to see how a two-week paycheck breaks down.

Reading a pay stub

Every paycheck comes with a pay stub (on paper or in an online portal) that shows the math. Stubs look different from one employer to the next, but they almost always include:

• Pay period: the dates you're being paid for. Many employers pay every two weeks, which works out to 26 paychecks a year.
• Hours and rate: how many hours you worked and your hourly wage. Check these first; mistakes happen.
• Gross pay: hours × rate, plus any overtime or tips paid through the job.
• Deductions: each tax and other deduction, listed line by line.
• Net pay: what's deposited.
• Year-to-date (YTD): running totals of everything since January 1. YTD is handy for checking your pay over time, and it should match your W-2 at the end of the year.

The forms: W-4, W-2 and your tax return

When you start a job, you'll fill out a Form W-4. It tells your employer how much federal income tax to withhold from each paycheck. You can submit a new one any time your situation changes. (You'll also fill out a Form I-9, which confirms you're allowed to work in the US.)

After the year ends, your employer sends you a Form W-2, usually by the end of January. It summarizes your total pay for the year and how much tax was withheld. You'll need it to file your tax return, the yearly form where you work out the income tax you actually owe.

Withholding is only an estimate. When you file your return, you compare what you really owe with what was already withheld:

• If more was withheld than you owe, you get the difference back as a refund.
• If less was withheld than you owe, you pay the difference.

Many students with part-time jobs owe little or no federal income tax for the year. If income tax was withheld anyway, filing a return is how you get it back. FICA is different: it isn't refunded just because your income was low.

Tips and gig work

Tips count as income. Whether they come in cash, on a card, or through an app, you're expected to report them to your employer, and they can be taxed. Tax rules for tips have changed recently, so check current IRS guidance when you file.

Gig and freelance work, like delivering food, tutoring, or selling crafts online, usually works differently from a regular job. If you're self-employed, nobody withholds taxes for you. You may get a Form 1099 instead of a W-2, or no form at all, and the income still counts. Self-employed people generally pay both the employee and employer shares of Social Security and Medicare, and may need to pay tax during the year. A simple habit helps: set aside part of every gig payment for taxes, and keep a record of what you earn.

Saving vs. investing

Saving means keeping money somewhere safe and easy to reach. Investing means buying something, like part of a company, that you expect to grow in value over time, while accepting that it can also lose value along the way.

The question that sorts them is simple: when will you need this money?

• Soon, or at any moment (your emergency fund, a car you're buying next year, a prom or a trip): keep it in a safe, accessible account. If the market drops the month you need it, you can't wait for it to recover.
• Many years from now (retirement, or long-term goals five or more years away): this money can be invested, because it has time to ride out the bad years.

Build your emergency fund first. Investing only makes sense once a surprise car repair won't force you to sell at a bad time.

Interest: simple and compound

When you keep money in a bank or credit union savings account, the bank pays you interest: a percentage of your balance, as a thank-you for letting it use your money. The rate is shown as an annual percentage, and it can change over time. Rates differ a lot between accounts, so it's worth comparing.

Savings accounts at insured banks and credit unions are protected by government-backed insurance up to a limit, so your balance won't vanish if the bank fails. The trade-off for that safety is that interest rates on savings are usually modest.

Interest comes in two kinds. Simple interest is paid only on the money you originally put in. Compound interest is paid on your original money plus the interest it has already earned, so your interest starts earning interest.

Put $1,000 in an account paying 5% a year, compounded once a year. After year one you have $1,050. In year two, you earn 5% of $1,050, which is $52.50, not $50. That extra $2.50 looks tiny, but it snowballs:

The longer the money sits, the bigger the gap. Time is the most powerful ingredient in compounding, and time is the one thing you have more of than any adult. Try the calculator below: change the number of years and watch what happens to the growth.

The Rule of 72, and why inflation matters

The Rule of 72 is a quick way to estimate how long money takes to double: divide 72 by the yearly growth rate. At 6% a year, 72 ÷ 6 = about 12 years. (The exact answer is about 11.9 years; the rule is an approximation that works well for everyday rates.)

It works in reverse, too. Inflation is the general rise in prices over time. If prices rose 3% a year, 72 ÷ 3 means they'd roughly double in about 24 years, so cash sitting still would buy about half as much. Even over 10 years at 3%, something that costs $100 today would cost about $134.39. Money in a drawer, or in an account paying less than inflation, is quietly losing buying power. That's the main reason long-term money gets invested instead of just saved.

Risk, return and diversification

In investing, risk and return go together. Investments that may grow more over time usually swing up and down more along the way. Here are the basics:

• Stocks are small pieces of ownership in a company. If the company grows and profits, the shares can rise in value; if it struggles, they can fall, sometimes to zero.
• Bonds are loans you make to a government or company, which pays you interest and returns your money at a set date. They're generally steadier than stocks, with lower expected growth, though they still carry some risk.
• Index funds are funds that buy a little of every stock or bond in a large group, following a market index. One purchase gives you a slice of hundreds of companies, usually with low fees.

Diversification means spreading your money across many investments so one bad one can't sink you. If one company fails, it's a small part of the whole. Over long periods in the past, a broad mix of stocks has grown more on average than savings accounts, but with big ups and downs, including years when the market lost a third or more of its value. Past results are not a promise about the future.

Retirement accounts

Retirement accounts are special accounts with tax benefits, designed to hold investments until you're older. Many employers offer a retirement plan at work, and anyone with a job may be able to open an IRA (individual retirement account).

A Roth IRA is especially interesting for teens. You put in money you've already paid tax on, and if you follow the rules, the growth can come out tax-free in retirement. You can only contribute if you have earned income (pay from a job, not gifts or an allowance), and you can't put in more than you earned that year or more than an annual limit set by the IRS. If you're under 18 and have a job, a parent or guardian can open a custodial Roth IRA for you. Taking money out early can bring taxes or penalties, so these accounts are for truly long-term money.

What credit is

Credit means borrowing now and paying back later. The money you owe is your debt, and the lender usually charges interest: an extra cost on top of what you borrowed.

The yearly cost of borrowing is shown as the APR (annual percentage rate). A higher APR means borrowing costs more. When you compare a car loan, a credit card or a student loan, the APR is one of the first numbers to check.

A debit card and a credit card can look identical, but they work differently. A debit card takes money straight out of your own checking account. A credit card is a loan: the card company pays the store, and you owe the card company. Credit cards generally come with stronger legal protection if your card is stolen, but they also make it easy to spend money you don't have.

How card interest builds, and the minimum-payment trap

Every month your card sends a statement showing what you owe. If you pay the full statement balance by the due date, most cards give you a grace period: you pay no interest at all on your purchases. Used this way, a card costs nothing extra.

If you pay less than the full balance, you're "carrying a balance," and interest kicks in. A simple way to picture it: divide the APR by 12 to get a monthly rate, then apply it to what you owe. At 24% APR, the monthly rate is 24% ÷ 12 = 2%, so a $1,000 balance adds about $20 of interest in a month. (Real cards usually figure interest daily, so actual amounts differ a little, but the idea is the same.)

The statement also shows a minimum payment, often a small percentage of the balance or a small flat amount. Paying it keeps your account in good standing, but much of it goes to interest, so the balance shrinks slowly. Next month you pay interest on what's left, including last month's interest. Your statement is required to show how long paying only the minimum would take; it's worth reading.

Try the calculator below with your own numbers. Then try Luis's $1,000 at 24% with a $20 payment and see what happens.

Credit reports and credit scores

Lenders want to know how you've handled debt before. Your credit report is a record of your accounts: what you've borrowed, your limits, and whether you've paid on time. Three nationwide credit bureaus keep these reports, and federal law lets you check yours for free.

A credit score turns that report into one number. The most widely used, the FICO score, runs from 300 to 850; higher is better. A good score can mean lower interest rates, and landlords and some employers may look at your credit too. The score is built from five factors:

• Payment history (35%): do you pay on time?
• Amounts owed (30%): how much of your available credit are you using?
• Length of credit history (15%): how long have your accounts been open?
• New credit (10%): have you opened or applied for a lot of accounts recently?
• Credit mix (10%): do you have different kinds of credit, like a card and a loan?

A big part of "amounts owed" is credit utilization: your card balances divided by your credit limits. A $300 balance on a $1,000 limit is 30% utilization. A common guideline is to stay under 30%, and lower is better.

Starting to build credit

With no history, it's hard to get credit, and without credit, it's hard to build history. A few common ways in:

• Authorized user. A parent adds you to their card. Their account may appear on your credit report, which helps if they pay on time and hurts if they don't.
• Secured card. You put down a cash deposit, which usually becomes your credit limit. It works like a normal card and reports your payments.
• Student card. A card made for students, usually with a low limit.

You generally have to be 18 to open a card in your own name, and before 21 you'll need to show income of your own or have a co-signer. Whatever you start with, use it for something small you'd buy anyway, like gas, and pay it off in full.

Debt that can pay off, and debt that mostly costs you

Not all debt is equal. Borrowing can make sense when it helps you build something lasting, like an education that raises your earning power, at a reasonable rate you can realistically repay. Debt for things that are gone quickly, like takeout or clothes carried on a card, mostly just costs you.

Student loans come in two main kinds. Federal loans come from the government; you apply by filling out the FAFSA, and they have fixed rates and flexible repayment options. Private loans come from banks and other lenders, often need a co-signer, and usually have fewer protections. On many student loans, interest starts building up while you're still in school. Borrow only what you need, not the most you're offered.

Two kinds of borrowing deserve extra caution:

• Payday loans are small loans due on your next payday, with steep fees. A $15 fee for every $100 borrowed for two weeks works out to an APR of about 391%.
• Buy now, pay later splits a purchase into a few payments. One plan can be manageable, but several at once are easy to lose track of, and missed payments can mean fees.

Revenue, costs and profit

Revenue is all the money a business brings in from sales. For a simple business, it's price × units sold. Sell 40 bracelets at $5 each and your revenue is $200.

Revenue is not what you keep. First you have to pay your costs, and they come in two kinds:

• Variable costs go up and down with how much you sell. Every extra batch of cookies needs more flour, butter and boxes. Sell nothing, and variable costs are zero.
• Fixed costs stay the same whether you sell one item or a hundred: a monthly booth fee, a website subscription, a license. You pay them even in a slow month.

What's left over is profit: profit = revenue − costs. If costs are bigger than revenue, the result is negative, and that's a loss.

Gross profit, net profit and margin

Businesses usually look at profit in two steps.

• Gross profit = revenue − the direct cost of the things you sold (ingredients, materials, packaging). It tells you whether each sale makes money on its own.
• Net profit = what's left after all expenses: the direct costs plus fixed costs like rent and fees (and, for a real company, interest and taxes). This is the "bottom line."

A dollar amount alone doesn't tell you much. $100 of profit is great on $200 of sales and weak on $10,000. So businesses also use profit margin: profit ÷ revenue, written as a percentage. A 25% net margin means you keep 25 cents of every dollar of sales.

The break-even point

Every item you sell brings in its price, but part of that goes straight back out as variable cost. What's left is the contribution margin per unit: price − variable cost. That money "contributes" toward paying your fixed costs, and once they're covered, it becomes profit.

The break-even point is how many units you must sell to cover all your costs, with zero profit and zero loss:

Break-even units = fixed costs ÷ (price − variable cost)

Say you resell phone cases for $20 each, they cost you $12, and you pay $100 a month for online store fees. Each case contributes $8, and $100 ÷ $8 = 12.5. You can't sell half a case, so always round up: you need 13 cases. At 12 you'd still be $4 short; at 13 you're $4 ahead.

Try the calculator below with your own numbers. Notice how a small change in price moves the break-even point a lot.

Pricing: what should you charge?

There are two basic ways to think about price, and good prices use both.

• Cost-plus pricing starts from your costs and adds a markup. If Aisha's full cost at 50 boxes is $420 ÷ 50 = $8.40 a box and she adds a 50% markup, she'd charge $12.60. This makes sure you cover costs, but it ignores what buyers think the product is worth.
• Value-based pricing starts from what customers are willing to pay. Look at what similar products sell for nearby and what makes yours different: custom designs, local delivery, better ingredients. If people happily pay $15 for a custom box, charging $12.60 leaves money on the table.

Cost sets the floor; what customers will pay sets the ceiling. And one cost is easy to forget: your own time. If you don't count it, you can be busy every weekend and still earn almost nothing for the work.

Cash flow is not the same as profit

Profit is a calculation over a period. Cash flow is the actual money moving in and out of your account, and when it moves. A business that is profitable on paper can still run out of cash and be unable to pay its bills. Common reasons:

• You pay before you get paid. Suppliers, rent and fees are often due right away.
• Inventory is bought up front. Money spent on stock sitting on a shelf isn't available for anything else.
• Customers pay late. Some customers, especially other businesses, pay 30 days or more after delivery.

Say a school club orders 40 boxes from Aisha for $600, to be paid 30 days after delivery. She has to spend 40 × $6 = $240 on ingredients and packaging now. On paper the order adds $360 of contribution; in her bank account it's −$240 until the club pays. If she doesn't have that $240, a good order becomes a problem.

Businesses keep track of all this with three standard reports, called financial statements:

• The income statement (also called a profit and loss statement) shows revenue, expenses and profit over a period, like a month or a year.
• The balance sheet is a snapshot on one day: what the business owns (assets), what it owes (liabilities), and the difference, which belongs to the owners (equity).
• The cash flow statement shows the cash that actually came in and went out over a period, which is how you spot a cash squeeze even when profit looks fine.

Start with a problem, not a product

Most new ideas start as "I want to sell this thing." A stronger start is "people I know keep running into this problem." If the problem is real and annoying enough, someone may pay to make it go away. If it isn't, even a great product will sit on the shelf. Look for problems you already understand: kids stuck on homework, neighbors who need a dog walked, classmates with cracked phone screens.

Then get specific about your customer: the person who actually pays. "Everyone" is not a customer. "Parents of middle schoolers in my neighborhood" is. The customer and the user can be different people: a kid gets the tutoring, but a parent pays, so the parent is the one you have to convince.

Test the idea before you spend money

The riskiest move is spending your savings on supplies and a logo, and only then finding out whether anyone wants what you're selling. Test first, in steps that cost little or nothing:

• Talk to potential customers. Ask about the problem, not your idea: "What's the hardest part of…?" and "What do you do about it now?"
• Ask for a commitment. A pre-order or small deposit is the strongest signal there is. Plenty of people will say "I'd buy that"; far fewer will hand over money.
• Start with a small first batch. Bake one tray, not ten. Take three clients, not thirty. This simplest version that customers can actually pay for is called a minimum viable product, or MVP.

Each test either gives you a reason to keep going or saves you from a costly mistake. Both are wins.

A one-page plan, and the practical stuff

You don't need a 40-page business plan. One page that answers five questions is enough to start:

1. Problem: What problem are you solving?
2. Customer: Who has it, and who pays?
3. Solution: What exactly will you offer?
4. How you make money: What's your price, and how often will people buy?
5. Costs: What are your fixed and variable costs, and how many sales do you need to break even?

Then check a few practical things. Rules differ from place to place, so treat these as questions to ask, not answers:

• Age. If you're under 18, you may need a parent or guardian to sign some contracts or open some accounts with you.
• Local rules. Some businesses need a permit, and selling food made at home often has its own rules. Check with your city, county or state first.
• Separate money. Use a separate account, or at least a separate record, so you can see whether the business actually makes money.
• Records for taxes. Write down every dollar in and out. As lesson 2 explained, money you earn working for yourself can be taxable, and no employer is withholding taxes for you. A parent, guardian or tax professional can help you see what applies to you.

Careers in business: the main fields

Almost every organization, from a hospital to a sports team to a nonprofit, needs people who understand money and customers. In college, business is usually split into fields like these:

• Accounting: recording, checking and reporting an organization's money, including financial statements, audits and taxes. Many accountants become a CPA (Certified Public Accountant). In most states that has generally required 150 semester hours of college, more than a typical four-year degree, plus passing the CPA Exam and work experience. Some states have recently added other routes, so check your state's rules.
• Finance: how people and companies raise, invest and manage money, from banking to financial planning.
• Marketing: understanding customers, including research, pricing, advertising and sales.
• Management: leading people and running operations, from hiring and scheduling to strategy.
• Entrepreneurship: starting and growing new ventures, including new projects inside larger companies.
• Business analytics and information systems: using data and technology to make decisions, with spreadsheets, databases, statistics and some programming.

Three skills matter in all of them: using spreadsheets comfortably, communicating clearly in writing and out loud, and working with data to back up a decision. You can start building all three now.

Explore now, and look back at how far you've come

You don't have to pick a career in high school, but you can start finding out what you enjoy:

• Join a business club like FBLA or DECA if your school has one. They run competitions and events in areas like marketing, finance and entrepreneurship.
• Try an internship or job shadowing. Even a day watching someone work shows you what a job is really like. Part-time jobs count too: every job teaches you how a business runs.
• Ask for an informational interview. Ask someone in a field you're curious about for 15 to 20 minutes. Ask what a normal day looks like, what they studied, and what they wish they'd known at your age. Then send a thank-you note.

And look at what you've already learned. You can build a budget and read a paycheck. You know how saving and investing let money grow over time, and how credit can help you or cost you. You know how a business makes money and when it breaks even, and now how to start something of your own. That's a real foundation, and you're building it years earlier than most people do.

Why use a bank or credit union at all?

Cash in a drawer can be lost, stolen or burned, and once it's gone, it's gone. Money in an account is safer for a few reasons:

• Deposit insurance. Banks insured by the FDIC and credit unions insured by the NCUA protect your deposits up to $250,000 per depositor, per insured institution, per ownership category. If the bank or credit union fails, you get your insured money back. You can check an institution at FDIC.gov or NCUA.gov. Some money apps aren't banks, so check how yours protects your money.
• A record. Every deposit and payment is written down, so you can track your money and prove you paid someone. A good banking history also helps later, when you rent or borrow.
• No check-cashing fees. Without an account, cashing a paycheck often means paying a check-cashing store. At an assumed fee of 3%, cashing a $400 paycheck costs $12. Do that twice a month and it's $24 a month, or $288 a year, just to get your own money.

Banks are businesses owned by shareholders and run to make a profit. Credit unions are nonprofits owned by their members; you usually join based on where you live, work or go to school, or through family. Credit unions often have lower fees and big banks often have more branches, but neither is always better. Compare the actual accounts.

Checking, savings and your debit card

Most people have two accounts that work together:

• A checking account is for everyday money in and out: your paycheck arrives here, and your card purchases and bills come out of it.
• A savings account is for money you're not spending yet, like an emergency fund or a car goal. It usually pays some interest and is a little harder to spend on impulse, which is the point.

A debit card takes money straight out of your checking account. It is not a credit card: you're spending your own money, not borrowing. (The Money & Business Foundations course covers credit.) At an ATM or some store checkouts, you'll type your PIN, a short secret number. Never share it, never write it on the card, and cover the keypad when you type it.

Your bank's own ATMs, and those in its network, are usually free. An out-of-network ATM often charges a fee, and your own bank may add a second fee on top. Using an in-network ATM, or getting cash back when you pay at a store, usually avoids both.

Common fees, and how to avoid them

• Monthly maintenance fee: a charge just for having the account. Many student accounts skip it, and others waive it if you set up direct deposit or keep a minimum balance.
• Minimum balance fee: charged if your balance falls below a set amount. Know the number before you open the account.
• Overdraft fee: an overdraft happens when you spend more than is in your checking account and the bank pays anyway, leaving you with a negative balance. Then it charges you a fee, which can be far bigger than the purchase.
• NSF fee: if the bank refuses a payment instead, such as a check or automatic bill, it may charge a nonsufficient funds (NSF) fee, also called a returned-item fee. The bill still isn't paid, and the company may add a late fee.

For ATM withdrawals and everyday debit card purchases, federal rules say a bank can charge an overdraft fee only if you've opted in to overdraft coverage. If you haven't, the card is simply declined. Fees vary, and some banks charge little or nothing, so read your account's fee list. Low-balance alerts and linking savings to cover overdrafts can also help.

Your statement and your banking app

Each month your bank gives you a statement: your starting balance, every deposit (credit), every withdrawal or payment (debit), any fees, and your ending balance. Read it: do you recognize every charge, and were there fees you didn't expect? If something looks wrong, contact your bank right away; the sooner you report a problem, the more protection you usually have. Lesson 3 covers fraud in detail.

Your bank's app makes day-to-day banking easier:

• Mobile banking lets you check your balance, move money between checking and savings, and turn on alerts.
• Direct deposit sends your pay straight into your account. Your employer will ask for your bank's routing number and your account number.
• Mobile check deposit lets you photograph the front and back of a signed check. Follow your bank's signing instructions and keep the paper check until the deposit clears; the money may not be available right away.
• Peer-to-peer (P2P) payments let you send money to a friend using their phone number or email. They're fast, but money sent is usually hard to get back, even if you sent it to the wrong person or a scammer. Double-check before you tap send, and see lesson 3.

Opening your first account

If you're under 18, most banks and credit unions will ask a parent or guardian to open the account with you, as a joint owner or custodian. That adult can usually see and use the account too. Requirements vary, so check the website or call first. Generally, you'll need:

• A form of ID for you and for the adult, and your Social Security number.
• Money for the first deposit, if there's a minimum.
• Questions ready: What are the monthly and overdraft fees? How do I avoid them? Where are the free ATMs?

Compare the price per unit, not per package

Two bottles of shampoo sit side by side: one is bigger and costs more. Which is the better deal? You can't tell from the price alone. You need the unit price: the price divided by the amount you get, such as dollars per ounce or cents per sheet.

Many stores print the unit price in small type on the shelf tag. If they don't, divide it yourself: price ÷ size. Make sure both products use the same unit (ounces with ounces, not ounces with "count").

Bigger is often cheaper per unit, but not always. A smaller size may be on sale, or a store may simply price the big one higher. And a bulk bargain only saves money if you'll use it all before it goes bad. Try the calculator below with any two sizes you find.

Sales, coupons and stacked discounts

Percent off is simple once you turn it into money. For 30% off a $45 hoodie, 30% of $45 is $13.50, so you pay $31.50. A shortcut: 30% off means you pay 70%, and 70% of $45 is $31.50.

"Buy one, get one" deals depend on the fine print. "Buy one, get one free" on a $6 item means two for $6, or $3 each: 50% off, but only if you actually wanted two. "Buy one, get one 50% off" on a $12 item means $18 for two, or $9 each. That's only 25% off per item.

Stacked discounts don't simply add up. If a jacket is 20% off and you get "an extra 10% off at the register", the second discount comes off the already-reduced price. On a $50 jacket: 20% off leaves $40, then 10% off $40 leaves $36. That's $14 off in total, or 28% off, not 30%.

At the register and after: tax, receipts and warranties

In the US, the price on the tag usually doesn't include sales tax; it's added when you pay. The rate depends on your state and often your city or county too, and a handful of states have no statewide sales tax at all. Some items, like groceries, may be taxed at a lower rate or not at all, depending on where you live.

Keep your receipt, or a photo of it, until you're sure you're keeping the item. Check the return policy before you buy: many stores give you a set number of days, some charge a restocking fee, and "final sale" items often can't be returned at all.

Many products come with a manufacturer's warranty that covers defects for a set time. At checkout you may be offered an extended warranty for extra money. Read what it covers and compare its price with the cost of simply replacing the item. For cheap items, an extended warranty is often not worth it.

Costs that keep coming

Buy now, pay later plans split a purchase into a few payments, often four over several weeks. Some charge no interest if every payment is on time, but missed payments can bring late fees, and several plans at once are easy to lose track of. Store financing and store credit cards work in a similar way over longer periods. Watch for deferred interest offers ("no interest if paid in full in 12 months"): if any balance is left when the promotion ends, interest can be charged all the way back to the purchase date. Paying later doesn't make anything cheaper; at best it costs the same. The Money & Business Foundations course covers interest and credit in more depth.

Subscriptions and free trials usually auto-renew: when the trial ends, your card is charged unless you cancel. A forgotten $9.99-a-month trial costs $119.88 a year. When you start a trial, set a reminder to decide a day or two before it ends.

Finally, think about total cost of ownership: the price to buy something plus what it costs to use it. A cheap printer can need expensive ink. With example numbers, a $40 printer that needs a $30 cartridge every two months costs $40 + (12 × $30) = $400 over two years. Game consoles, phones and cars work the same way: add up the extras, not just the sticker.

Marketing tricks and the 24-hour rule

Stores and brands want you to buy now. A few common tactics:

• Urgency: "Only 3 left!", countdown timers, "today only". Pressure to decide fast leaves no time to think.
• Anchoring: "Was $120, now $60!" The "was" price sets a reference point that makes $60 feel like a win, even if the item rarely sold for $120. Ask whether it's worth $60 to you.
• Influencer ads: a creator you like shows off a product. They may be paid or given it free. Paid posts are supposed to be labeled, with tags like #ad or "paid partnership", but they're still ads.
• Free shipping thresholds: "Free shipping over $35" can nudge a $28 cart up to $35 with things you didn't plan to buy.

A simple defense is the 24-hour rule: for anything that isn't a planned or needed purchase, wait a day before buying. If you still want it tomorrow and it fits your plan, buy it. Often the urge has passed.

The warning signs most scams share

Most scams use the same few tricks. Learn them and you can spot scams you've never seen before:

• Urgency. "Act in the next 30 minutes or your account will be closed." Pressure stops you from thinking or asking someone.
• Secrecy. "Don't tell your parents" or "keep this between us." Real businesses and friends don't need you to hide things.
• Unusual ways to pay. Gift cards, wire transfers, cryptocurrency or a payment app. These are fast and very hard to reverse. Anyone who demands to be paid in gift cards is a scammer, every time.
• Too good to be true. A prize you never entered for, or $500 a week for "a few minutes a day."

If a message hits even one of these, slow down. Check with someone you trust, or contact the company using a website or number you already know, not the one in the message.

Scams teens actually run into

• Phishing texts and emails. A message that seems to be from your bank, a delivery company or your school, with a link to "confirm your account" on a fake login page. Open the real app or website yourself instead.
• Fake online stores. Slick sites or social media ads with prices far below anywhere else. You pay, and nothing arrives, or a cheap fake does.
• Marketplace overpayment scams. A buyer "accidentally" pays too much and asks for the difference back (see the worked example).
• Fake jobs, "reshipping" and money-mule offers. "Jobs" that have you reship packages or pass money through your account. The goods and money are usually stolen, and moving money for someone else can be a crime, even if you didn't know.
• Fake prizes and scholarship scams. "You've won! Just pay a small fee to claim it." Real prizes don't charge you to collect, and you never pay to get a scholarship.
• Romance and friendship scams. Someone you've only met online becomes close over weeks, then suddenly has an emergency and needs money or gift cards.
• "Verification code" scams. "Hey, I accidentally sent my code to your number, can you send it to me?" That code is the key to your account. Send it, and they can lock you out and scam your friends as you.

Payment apps work like cash

Peer-to-peer payment apps are great for splitting a pizza. But sending money with one usually works like handing over cash: it moves in seconds, and if you paid a scammer, the app often won't refund it because you approved the payment.

Money coming to you is different. If it came from a stolen card or account, it can be pulled back later, as Kenji found out. Fake checks can bounce the same way. So send app payments only to people you know in real life, double-check the name before you tap send, and don't treat a stranger's payment as final.

Lock down your accounts

Many account takeovers come from reused passwords or shared codes, not movie-style hacking. Four habits help:

• Use a strong, unique password for every account. Long beats clever: a passphrase of four or more random words, like "copper-lantern-mango-sleet", is easier to remember and harder to guess than "P@ssw0rd1". Unique means a leak at one site puts only that account at risk.
• Consider a password manager. This is an app or browser feature that creates and remembers a strong password for each account, so you remember just one master passphrase.
• Turn on two-factor authentication (2FA). The site also asks for a second proof, usually a one-time code sent to your phone or shown in an authenticator app, so a stolen password alone isn't enough.
• Never share a one-time code. Not with a "friend," "customer support" or someone who says they sent it by mistake. Real companies won't ask you to read one back.

Identity theft: what it is and what to do

Identity theft is when someone uses your personal information, such as your name, birthday or Social Security number, to open accounts, borrow money, or file taxes as you. They get the money; you get the bills and damaged credit (the Money & Business Foundations course covers credit scores).

Teens are a favorite target because you usually have a clean record, often no credit file at all, so a thief can build one in your name. It can go unnoticed for years, until you apply for a student loan, car loan or apartment and get turned down.

Warning signs include bills or collection calls for accounts you never opened, charges you don't recognize, being turned down because of a credit history you don't have, or a notice that a tax return was already filed in your name. If it happens, move quickly:

• Contact your bank or the company involved (look up the number yourself) and change your passwords.
• Report identity theft at IdentityTheft.gov, which creates a personal recovery plan.
• Report scams and fraud at ReportFraud.ftc.gov, even if you didn't lose money.
• Freeze your credit. It stops lenders from seeing your credit report, so it's very hard for anyone to open new credit in your name. It's free by federal law, and a parent or guardian can request one for a child under 16.

Adults can check their credit reports free at AnnualCreditReport.com. For a minor, a parent or guardian can ask each credit bureau whether a report even exists.

What insurance actually does

Some losses are small: a lost water bottle. Others are huge and rare: a car crash, a hospital stay, an apartment fire. You can't know in advance whether one will happen to you this year, but across a big group of people, it's fairly predictable how many will happen to someone.

That's the idea behind insurance: pooling risk. Imagine 100 students who each own a $1,000 laptop, and in a typical year about two of those laptops get destroyed. If everyone pays $20 into a shared pot, the pot holds $2,000, which is enough to replace both. Each student trades a small, certain cost ($20) for protection against a large, uncertain one ($1,000).

Real insurers work the same way, but they also cover their costs and profit, so on average people pay in more than they get back. That's fine: you're not buying insurance to come out ahead. You're buying it so that a disaster you can't afford becomes a cost you can.

The words on every policy

The same words show up whether you're insuring a car, your health or an apartment.

• Your policy is the contract: what's covered, what isn't, and what it costs.
• The premium is what you pay to keep the policy active, usually every month. You pay it whether or not anything goes wrong.
• When something does go wrong, you file a claim: a request for the insurer to pay.
• The deductible is how much of the covered costs you pay yourself before the insurer starts paying.
• Health plans often add a copay (a flat fee, like a set amount per doctor visit) and coinsurance (a percentage you share after the deductible). With 20% coinsurance, a $1,000 covered bill means you pay $200 and the plan pays $800.
• The out-of-pocket maximum is the most you'll pay for covered care in a year; after that, the plan pays 100% of covered costs. Your premiums don't count toward it.
• A coverage limit is the most the insurer will pay. Anything above it is on you.

Low premium or low deductible?

Most insurance lets you choose between two kinds of plans, and they pull in opposite directions:

• Low premium, high deductible: cheaper every month, but you pay more yourself when something happens.
• High premium, low deductible: more expensive every month, but less of a hit when something happens.

Neither is always better. If you rarely need the coverage, the low premium usually wins. If you expect big bills, the low deductible usually wins. And whichever plan you pick, you need to be able to pay its deductible if the worst happens. Try the calculator below to compare two plans for any amount of bills.

Auto insurance

Almost every state requires drivers to carry liability coverage. It pays for damage and injuries you cause to other people and their property, up to your policy's coverage limits. It does not pay to fix your own car. That's what the other two main types are for:

• Collision pays to repair your car after a crash, whether you hit another car or a pole.
• Comprehensive covers damage that isn't a crash: theft, hail, fire, vandalism or hitting a deer.

Collision and comprehensive are usually optional, though a lender typically requires them if you have a car loan. Lesson 6 looks at buying a car.

Teen drivers usually pay more than almost anyone else, because insurers see new drivers as more likely to crash. Premiums can come down in a few general ways: many insurers offer good-student discounts, discounts for finishing a driver's education course, and lower rates for a clean driving record. Staying on a family policy, driving a less expensive car and choosing a higher deductible can also help.

Health, renters and phone plans

Health insurance. Young adults can generally stay on a parent's health plan until age 26, even if they move out or aren't in school. Most plans have a network of doctors and hospitals that have agreed on prices with the plan. Staying in-network costs you less; going out-of-network can cost much more or may not be covered at all. Check before you book an appointment.

Renters insurance. When you rent, your landlord's insurance covers the building, not your stuff. Renters insurance covers your belongings (clothes, laptop, furniture) if they're stolen or damaged by something like a fire, and it usually includes liability coverage if someone is hurt in your home. It's usually inexpensive compared with what it would cost to replace everything you own.

Phone and device protection plans. Stores and carriers often offer a plan for a monthly fee, and many also charge a deductible each time you file a claim. Before signing up, add it up: a plan at an example price of $10 a month costs $120 a year and $240 over two years, before any deductible. Compare that with what a repair or replacement would actually cost you.

When insurance isn't worth it. Insurance makes the most sense for losses you couldn't cover yourself. For small, affordable losses, like cheap earbuds or a phone case, you'll usually do better by skipping the coverage and keeping that money in savings to pay for the rare replacement.

What college really costs

A year of college costs more than tuition. The cost of attendance is a college's estimate of everything a year will take:

• Tuition and fees: what the college charges for classes and services.
• Housing and food: a dorm and meal plan, or rent and groceries.
• Books and supplies: textbooks, a laptop, lab materials.
• Transportation: getting to campus and home for breaks.
• Personal expenses: a phone bill, toiletries, laundry, the occasional meal out.

The sticker price is the full, published price before any help. Many students don't pay it. What matters is the net price: the cost of attendance minus the grants and scholarships you receive, which is money you don't pay back.

That means a college with a scary sticker price can end up cheaper than one that looks affordable. To get an early estimate, look for the net price calculator on each college's website. You answer questions about your family's finances and it estimates what you might actually pay there. It's only an estimate, but it's far more useful than the sticker price.

The FAFSA

The FAFSA (Free Application for Federal Student Aid) is the form that opens the door to federal grants, work-study and federal student loans. Many colleges and states also use your FAFSA to decide their own aid, so skipping it can cost you money from several places at once.

A few things to know:

• You file it every year you want aid, not just once.
• It asks about your family's income, so you'll usually fill it out with a parent or guardian.
• It's free. The official site is StudentAid.gov, and that's also where to check the current opening date and deadlines. Colleges and states can have their own, earlier deadlines, so check those too.

Even if you think your family earns too much to qualify, filing can still matter: some colleges won't consider you for their own aid without it.

The four kinds of aid

When a college accepts you, it sends an aid offer listing the help it can give. Everything on it falls into one of four groups:

• Grants are usually based on financial need and come from the federal government, your state or the college. You generally don't repay them.
• Scholarships are often based on grades, talents, activities or background, and come from colleges and outside groups. You generally don't repay them either.
• Work-study is a chance to earn money at a part-time job, often on campus. You earn it as you work, so it isn't taken off your bill up front.
• Loans are borrowed money. You repay them, with interest.

Only grants and scholarships lower your net price. Work-study is a paycheck, and loans are a bill you'll pay later. That's why comparing offers takes more than looking at the biggest total: an aid offer full of loans isn't free money.

Student loans: federal vs. private

If you borrow, the kind of loan matters as much as the amount.

• Federal student loans come from the US government through the FAFSA. They have fixed interest rates, so your rate won't change over the life of the loan. They also come with protections, including income-driven repayment options that can lower your monthly payment if your income is low.
• Private student loans come from banks, credit unions and other lenders. Students often need a co-signer, usually a parent, who is equally responsible for the debt. Rates can be fixed or variable, and they generally offer fewer protections if you have trouble paying.

Because of those differences, many families look at federal loans first and private loans only to fill a remaining gap. Either way, a loan is a promise to make monthly payments for years. Try the calculator below: enter an amount borrowed, an APR and a number of years to see the monthly payment and how much of what you repay is interest.

How much to borrow, and cheaper paths

A common guideline is to try to keep your total student debt below what you expect to earn in your first year after graduating. It's a rule of thumb, not a law, and pay varies a lot by career, but it's a useful check. If Andre expects to start at around $45,000 a year (an example figure), College A's $16,000 is well under that, while College B's $48,000 is over it.

There are also ways to lower the cost of a degree:

• Community college, then transfer. Taking your first one or two years at a community college usually costs much less. Check early that your credits will transfer to the four-year school you want.
• In-state public colleges. Public colleges usually charge students from their own state less than students from other states.
• Earning credit in high school. Dual enrollment classes and AP exams can count toward a degree, depending on each college's rules, which means fewer courses to pay for later.

What a car really costs

When people talk about a car's cost, they usually mean the price or the monthly payment. The total cost of ownership is bigger. Every month or year you'll also pay for:

• Insurance. Almost every state requires auto liability insurance, and a lender usually requires more coverage. Lesson 4 explains how premiums and deductibles work.
• Gas (or charging), which depends on how far you drive.
• Maintenance and repairs: oil changes, tires, brakes and surprise repairs.
• Registration and fees your state charges to keep the car on the road, often yearly.

Here's an example with made-up numbers: a $300 payment, $150 insurance, $120 gas, $50 set aside for maintenance, and $20 for registration (a $240 yearly fee spread over 12 months). That car costs $640 a month, more than twice the payment.

New or used? New cars generally lose value fastest in their first few years, so the first owner absorbs the biggest drop. A used car lets someone else take that hit, but it may need more repairs and has less warranty left. Compare the total cost of the specific cars you're considering.

If you buy used, a few checks protect you:

• Get a vehicle history report using the car's VIN (vehicle identification number) to look for past accidents, flood damage or a salvage title.
• Pay for an independent inspection by a mechanic you choose, not one the seller picks.
• Test drive it, check for open safety recalls, and make sure the seller's name and the car's VIN match the title.

Shop for the loan before the car

Many people borrow to buy a car, and it pays to find the loan first. You can apply to a bank or credit union for preapproval: the lender reviews your finances and tells you how much it will lend and at what rate. Then you walk into the dealership knowing your budget and holding a rate to beat. If the dealer offers financing, compare its APR (annual percentage rate, the yearly cost of borrowing including interest) with yours, and pick whichever costs less.

The other big choice is the loan term, how many months you take to pay. A longer term spreads the same amount over more payments, so each payment is smaller. But you're borrowing the money for longer, so you pay interest for longer, and the total you pay goes up. A bigger down payment (cash you pay up front) shrinks the loan and the interest.

Try the calculator below: enter a price, down payment, APR and number of months, then change only the months and watch what happens to the total interest.

Your first apartment: rent and move-in costs

A common guideline is to keep rent at or below about 30% of your gross income (what you earn before taxes). It's a rule of thumb, not a law. If you earn $3,000 a month before taxes, 30% is $900.

Moving in costs much more than one month's rent. Expect:

• First month's rent, and sometimes the last month's too.
• A security deposit, often around one month's rent, held by the landlord to cover unpaid rent or damage beyond normal wear.
• Application fees for background and credit checks, usually per adult applicant.
• Utility setup: electricity, gas, internet, and sometimes a deposit if you have no credit history.

For a $1,000 apartment with a $1,000 deposit, a $40 application fee and $100 in utility setup, you'd need $2,140 before you sleep there once, before furniture or moving costs.

The lease, roommates and your deposit

A lease is a legal contract. Read all of it before you sign, and ask about anything unclear. Look especially for:

• The term: how long it lasts (often 12 months) and what happens at the end.
• The deposit: what it can be used for and how and when it's returned. Rules vary by state.
• Who fixes what: which repairs are the landlord's job, and how to request them.
• Breaking the lease: if you leave early, you may owe a fee or rent until the unit is re-rented.
• Guests and pets: limits on overnight guests, pet rules, and any pet fees or deposits.

Roommates make rent cheaper; $1,800 split two ways is $900 each. But if you both sign the lease, the landlord can often hold either of you responsible for the full rent if the other stops paying. Agree in writing on who pays what (rent, utilities, internet, shared supplies), when, and what happens if someone moves out.

Your landlord's insurance usually covers the building, not your belongings. Renters insurance covers your stuff and your liability, often for a modest monthly premium; see Lesson 4 for how policies work.

Finally, document the unit's condition on move-in day. Take dated photos and videos of every room and any scratches, stains or damage, note them on the move-in checklist if there is one, and keep a copy. When you move out, that record helps show which damage was already there, so it doesn't come out of your deposit.

Looking back at the whole course

You've finished Financial Literacy: Money in Real Life. You learned to pick and use a bank account, spend with a plan instead of on impulse, spot scams and protect your identity, use insurance to handle big risks, weigh the true cost of college, and now, take on a car and an apartment with your eyes open.

You don't need to be rich to use any of this. Ask questions, read before you sign, compare before you buy, and come back to these lessons when a real decision shows up. You're more ready than you think.