It’s never too early to start thinking about your financial future. Being financially stable and independent at a young age can help you avoid debt and other financial problems, not to mention give you the peace of mind that comes with knowing you’re in control of your money and future. Follow these seven financial tips for young adults to get started on this path.
Financial Tips for Young Adults
Here are seven financial tips for young adults starting on their own career
Look at your spending
One way to feel more financially secure is to have an actual picture of your money spending. Many of us don’t do a great job keeping track of expenses, which means we have no idea how much is going out every month.
Get your hands on some recent bank and credit card statements—add them up, write down any particular charges that might be surprising (do you spend $500 a month eating out?), and look at ways to cut down if you’re overspending in certain areas.
The first financial tips for young adults is to make a financial plan and plan other things. In other words, thinking about money isn’t just something you do before you have any—it should be a habit. This plan should consider your needs and wants and short-term and long-term goals.
Once you have your money under control, you’ll be able to focus more of your time and energy on building a career or pursuing personal interests. And while it may not seem like much now, planning will also allow you to save up some cash down the road that can go toward future investments or cover life’s unexpected expenses. As a bonus, setting up these plans can also help boost your credit score!
Check our website for more financial tips for young adults to start building your financial plan. We also have several specialized products that can help you get started – including loans and savings accounts, not to mention insurance products to protect yourself against unexpected losses.
Finally, don’t forget to seek out information and guidance from trusted sources! Whether you take courses at college or university, seek advice from family members or friends, or talk to an expert like us, the more information you have at your disposal, the better prepared you’ll be when managing your money.
Know Your Credit Score
Your finances are probably pretty simple if you’re starting in life. Maybe it’s just you and your phone bill, or perhaps you have a mortgage payment to deal with every month. Either way, it’s essential to know what sort of credit score you have.
A good credit score can lead to lower interest rates when borrowing money and higher approval chances when applying for loans and other forms of credit.
If you want to know your credit score—or if you’re going to find out how good a financial position you’re in—visit myFICO, a website that lets users check their scores and get information about things like mortgages and auto loans. It’s free (and takes just five minutes), so get started today!
You might be surprised by how your finances have grown as you’ve aged. It can also affect your credit score, and knowing what yours is can help you stay financially responsible and make good choices when applying for loans or getting other types of credit.
Once you know your score, use it to monitor where your money is going and learn about areas that need improvement. You can then improve those areas to get a better financial position. If you want to apply for a loan or get another type of loan, like an auto loan, work with a reliable lender so they know how well you manage your money.
Prepare an Emergency Fund
It doesn’t take much to cause serious financial setbacks in your 20s. While your schedule and personal needs might differ, setting aside a small amount of money every month will help you weather any unexpected costs.
Many experts suggest putting three to six months of living expenses into a savings account separate from checking or savings accounts. If you lose your job or get hit with a hefty medical bill, it won’t derail you from making regular payments. With an emergency fund in place, you’ll feel confident that you can handle unexpected expenses. However, it’s important to remember that an emergency fund is a last resort. Before touching your savings, consider any potential budget cuts or additional income sources to cover higher costs.
For example, if your phone bill increases significantly and your plan doesn’t include a cell phone line with unlimited calling, consider ditching your smartphone and using a landline or VoIP service instead. You can save hundreds of dollars annually while maintaining consistent communication with family and friends. If cutting back isn’t feasible, explore other ways to bring in additional cash so you don’t have to tap into your savings account for everyday expenses.
Don’t Compare Yourself To Others
It can be straightforward to compare yourself to others, but you should always resist that urge. There will always be people with more money or higher social status. It’s important to remember that you have your strengths and weaknesses—these things that set you apart from everyone else.
So focus on doing your best, regardless of what others are doing. The bottom line is that you don’t know their story; they don’t know yours. Be proud of yourself and do your best! If you’re an entrepreneur, it can be easy to compare yourself to other entrepreneurs who have made it big. But that could lead you to feel discouraged when your own business grows slowly. Instead, take inspiration from them and focus on building a sustainable future.
Look at what they do right and learn from their success so that you can create a life around entrepreneurship. It may not always be a fast or smooth road, but it will be worth it! So keep pushing forward no matter what happens along your journey. You can do anything if you set your mind to it!
Understand the Cost of Debt
If you’re a new adult, it can be tempting to get used to making minimum payments on your credit card bills—but if you are carrying debt, that could lead to some serious trouble in later years.
Be sure you understand precisely how much your debts will cost in interest. You might also want to consider consolidating your high-interest loans into one low-interest option—for example, using a personal loan instead of multiple credit cards. Doing so could save you thousands of dollars in interest over time.
For example, say you have three credit cards charging you interest rates of 15%, 10%, and 5%. Your total credit card balance is $10,000. That means your monthly payment will be $380.73 ($10,000 x 5%), but you’ll pay an additional $2,050 in interest over five years if you only make minimum payments.
On a personal loan with a 4% interest rate, however, your minimum charge would be just $243 per month—and after five years of paying that amount regularly and on time, you’d only owe $10,303 instead of $10,834 in total.
Get Financial Education
Before you can master all financial tips for young adults, you must look hard at where your money’s going. This means making a budget and tracking your expenses (and income). If you’re feeling overwhelmed, many free tools can help.
Whatever tool(s) you choose, it’s essential to keep adding detail to your budget as time progresses. Consider whether or not that daily latte is worth it—and don’t forget about recurring bills like insurance premiums and utility payments! Another important aspect of your education is understanding how credit cards work and how to use them responsibly. Unlike debit cards, credit cards can carry a lot of long-term costs (you’ll be charged interest if you take a balance) that are easy to miss when you’re busy using them. It’s also easy to misjudge whether or not you have enough money in your bank account to cover an upcoming purchase: with a credit card, you may think you have more than enough because it doesn’t show up as actual cash in your account.
Even if you’re not in debt, staying on top of your finances and watching out for potential problems is essential. If you have a credit card or loan debt, options can help you handle it.
Don’t expect instant gratification from either choice—filing for bankruptcy can take time and significantly impact your credit score in its aftermath; a refinanced ARM may carry higher interest rates due to going through the process—but both choices offer relief when handled appropriately.
With all above financial tips for young adults, I believe you can set out on your own to keep your career going, feel free to drop comments, we’ll appreciate your suggestion