For college-minded teens and their families, the usual plan of action is to head off to college the fall immediately following high school graduation. Four (or more) years of education is the natural move to keep the learning going and the teen in a structured environment.
But what about those teens who aren't ready to go straight to college and are seeking a year to do something off the beaten path? For those who have the flexibility – be it living with their parents, saved money, or a deferred acceptance to their college or university – teens who take a "gap" year can truly benefit from the experience. Here are four reasons this time away from schooling can make an impact that will last through college and beyond.
1. Discover Passions and Talents
Not every high schooler knows what they want to do or who they "want to be" right out of the gate. Even those who look forward to the college experience may wish to head into freshman year with some idea of where to focus their studies rather than going for a liberal arts program or without a point of reference.
Teens can take this year to research, intern, or even head abroad to enlighten and expand their imaginations to give them a sense of purpose, leading to a field of study that will benefit their future. As per Go Abroad, "There are so many life paths to follow, and so many careers and academic majors that you might have never considered. There are career fields out there that high school doesn't even touch on."
This time, whether at home or away, is the perfect time for the teen to reflect on who they are as a person, leading them to make choices that jive with their personality and interests. According to Her Campus, "Although we have a lot of responsibilities by the time we graduate high school, we're still pretty young. We've only known ourselves as a part of some kind of unit." It's the perfect time to see what makes the individual tick without peer influence, parental control, and the limited surroundings of the traditional school setting.
2. Better Prep for the Years to Come
Time off can help a teen become more mature and prepared for their transition to adulthood. Going straight from the high school hallways to the college dorms is a change, but still a similar course. Having time to make their own decisions, plan their own schedules, and learning as they go, teens will have the ammo to navigate college life where many decisions are left to the students.
As per Go Abroad, "Studies have shown that those who take a gap year perform better in college and are more satisfied with their careers after college." This year to restructure could be the very reason why.
The New York Times notes, "Nationally, one-third of college freshman don't return for a second year." With a gap year under their belts, students will be more likely to remain in school due to their time off to realize why they want to attend college in the first place with a plan in place for a clear direction.
3. Reboot and Refresh
After nearly their entire lives in school, teens surely could use a break. Not to loaf around lazily, but to refresh their minds and spirits, weigh their options, and reboot and recharge their brains for some of the most intense learning experiences they'll ever have.
As The New York Times puts it, "What if college freshman arrived on campus not burnt out from having been 'excellent sheep' in high school, but instead refreshed, focused and prepared to take full advantage of the rich resources and opportunities colleges have to offer?"
As long as their minds remain stimulated and the teens are doing something productive during this year, they'll remain school-ready yet with a newfound eagerness to get back to class with a mind ready to absorb new knowledge like a sponge.
4. Do Something Impactful
Along with taking time to grow personally and take some well-needed time for reflection and relaxation, a year off can become a time for making a difference in the world. Teens can use this year to volunteer, work with kids or the elderly, help their families make money, or something else that involves a giving mentality.
This "do good" notion will not only aid those in need but can impact the future goals for the teen. As per Go Abroad, "Maybe volunteering would fire you up with a passion for public health and you'll go pre-med in college. Maybe you'll realize that what you actually love is one-on-one mentoring, and you'll return home to join a mentoring organization to work with local kids."
Additionally, the work done can be used towards college credit or fulfill certain college-recommended or obligatory criteria. A win-win all around. Check out some gap year programs that can get any teen ready for a year to remember.
If you're a college-bound teen or a parent of one, this "gap" year could be a game changer. Consider the positives before diving head-first into freshman year. One year can mean many much more productive years to come.
When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.