Tuesday, March 10, 2015
Financial Tips for Young Adults
Unfortunately, personal finance is not a regularly studied topic in high schools or college. Many teenagers are entering life after high school and don't know how to properly manage their money. I would strongly encourage all young adults to take a personal finance class. It's just an all around good subject to invest time in because you will definitely benefit from it. Here are a few tips to get you started.
1. Learn self control.
If you're lucky, your parents taught you this as a child. Practicing self control in the context of spending will keep you from debt, impulsive decisions and regretted purchases. If you choose to save up for an item so that you can pay for it in full or deliberately think hard about a big purchase and weigh the pros and cons, you will learn to be conscious of where and how you spend money. Don't just buy the newest best things right when they hit the market - think about it and have self control!
2. Know where your money goes.
Once you've looked into personal finance a little bit, you'll see that it's extremely important that your expenses don't exceed your income. Track your monthly flow of money. What's going where? How much do you spend on food? Clothes? Gas? Bills? Figure it out! And don't spend more than you make - it's that simple.
3. Start an emergency fund.
It's so important to have some savings in the bank to fall back on in an emergency. Always always put some money in savings, no matter how little you make. Find a way to put money into an emergency fund every month - this should be part of your monthly expenses. Having this little "chunk of cash" can keep you out of trouble financially (and help you sleep better at night).
4. Start saving for retirement now.
Wait, what? Yes. I said that. You may only be a twenty-something, but let me tell you, you will never regret starting your retirement fund now. Just logically think about it: the younger you start saving, the more you'll have when you're older (right?). If you're employer offers a retirement savings of any sort (401K, Roth), do it! Often times companies will even contribute a percentage while you're working for them. That's free money. Think about the future and plan for it!
Financial planning is just that: planning. To see gains you need to be in charge of your finances and know what's going on with your money. Plan ahead - look to the future - set goals - see them achieved!