Young adults in every era struggle financially trying to make ends meet. While some are relatively successful, others often head plunge deeper and deeper into debt. Financial tips for young adults can help! Consider the following suggestions for successful money management.
Organize your finances
Not every young adult knows how to manage his or her money successfully. As a young adult, it is important to learn how to organize finances in a way that works. Your future, as well as your well being, and that of your prospective, young family may depend upon it. Are you planning on having children? There are some important things to consider like their education. Plan for these things accordingly.
Document your income and expenses
Document your income so that you know exactly how much money is coming in every month. Then begin to document your fixed and variable expenses. Note that your fixed expenses, like rent, car payments, insurance, heat and hydro are relatively stable and do not change a lot from month-to-month. Variable expenses such as food, clothing purchases and entertainment are more flexible. You should be able to juggle these around a bit.
Start a savings account
If you open a savings account immediately, then you get into the habit of saving money. This is where you can save money for the future, not money that you spend at random. Ten percent of your income is a reasonable amount to save every month. If you cannot start with ten percent, then save five percent and increase it when you are able to do so. What is important is that you have started a savings account. Consider taking out savings bonds or invest in long-term retirement or savings plans.
Build an emergency fund
When you establish an emergency fund, it allows some degree of flexibility in case you do encounter an unexpected emergency. Emergencies do happen, often at the most inconvenient times. For example, you may have a motor vehicle accident and have to pay a deductible. Where would you get the money from otherwise?
Purchase only what you need
Purchasing what you need, as opposed to what you want, allows you to spend your money more wisely. Young adults often think that they have to have many material things, but in fact, they may not need them at all, or at least do not need them immediately. What you do need must take priority. Do not fret about what other young adults have as they may have accumulated massive debts.
Be cautious with credit card transactions
Credit card transactions involve interest rates that are often unexpected by the user. It is very easy to use a credit card, but when it is time to repay it, you may find yourself paying the interest only instead of paying off the balance. Do you know what the interest rates on your current credit cards are? If they are too high, you may be able to consolidate them into one credit card with a lower interest rate. Talk to a financial adviser. You may pay your credit cards off monthly, or even destroy your credit cards if they become a financial burden.
Shop wisely
It is easy for young adults to overspend, particularly when it comes to making initial purchases for your home or young family. Plan to shop in such a way that you stay within appropriate financial guidelines. You do not want to return your purchases because you have overspent. Only buy high quality goods, as they will retain their value over time. Otherwise, you may find that you have to replace them.
Keep your receipts
If you make a practice of keeping all of your receipts, you will know exactly how much you have spent on your purchases. Keep receipts in a safe place and file them monthly. Remember that you may need them when you are filing your income tax.
Coupon shopping
Coupon shopping can save you dollars, but using coupons can also entice you to overspend on items that you would not ordinarily purchase, or may not even use. Many online coupons may be printed. Always check for validation dates, as they may not be honored everywhere.
Avoid borrowing
Borrowing money often proves to be a trap for young adults, as it is easier to borrow money than pay it back. Avoid borrowing from parents, family members or friends, as relationships can deteriorate very quickly if you are unable to repay your loans.
Being a young adult does not mean that you have to struggle financially. What it does mean is that if you are careful, then you will lay the foundation for a successful financial future for yourself and your family.