Becoming an adult is an exciting time as it brings with it so many freedoms and opportunities that aren’t available to us when we are younger. The chance to drive, work, socialize, and live independently are all huge perks of adulthood. Many young adults find that they are unprepared for the financial responsibilities, however, and that they don’t know how to do simple things like pay their bills or work out their taxes. It seems like we learn a lot of things in school which we never need to use, but that no one ever teaches us how to write a monthly budget.
To help everyone out there keep their money under control, here are 6 smart financial tips every young adult should live by.
1. Create an Effective Budget
There are a lot of young people who get into debt because they don’t have an effective budget to follow. We all know that sometimes it can be hard to make ends meet, but many young people earn enough money for their monthly expenses, they just mismanage it. An effective, well-planned household budget will help you to track your outgoings and prevent you from wasting money unnecessarily. Write down all of your monthly expenditures next to your monthly incomings and check that you can afford your lifestyle. You may need to look at making savings or you may even be able to save a little more each month.
2. Pay Off Debts as Quickly as Possible
Getting into debt can be a very slippery slope because it can result in you just working to pay off the interest without ever eating into the principal. Furthermore, the gurus from Moneyat30.com explain that the worst thing you can do is to continue making purchases without first paying off what you already owe. This is just going to get you into further debt which can end up burying you very quickly. There are various debt relief options if you find yourself in trouble such as bankruptcy or an Individual Voluntary Agreement, but these are going to seriously affect your financial record and credit rating. As a young person, you don’t want to jeopardize your future with a bad debt history, so pay it off as quickly as possible.
3. Limit Credit Card Use
One of the main reasons why young people get into debt in the first place is because of credit cards. When you first reach the age to qualify for a credit card it can almost seem like free money but it is so important that you recognize you will need to pay that money back. Credit card fees and interest rates can be very, very high, and this is what often gets people into trouble. Never purchase anything on a credit card that you know you cannot afford. Credit cards are not free money and they should always be used carefully.
4. Save a Little Every Month
We never know when an emergency situation might arise so it is very important that you always have some money put aside. The best way to do this is to save a little money each month to cover a burst pipe or a broken washing machine. Aim to save at least 10% of your income each month at the very minimum but the more you can save the better.
5. Make Small Savings Each Day
The best way to bump up those savings is to make small changes to your normal routine which will help you save money. For example, if you usually buy lunch when you are out at work, you can make some significant savings by making your own lunch at home. Take buses rather than taxis, and walk whenever you can. These small savings can really add up by the end of the month.
6. Minimize Your Life
We all have things that we don’t need or use lying around our homes and this is a great way to make some extra money. Every three months, look at all your items and see if there is anything you can sell. There are many useful online marketplaces on which you can sell unused items for extra cash.
Financial issues are one of the biggest concerns for young adults who have just started to live independently of parents or who have unfamiliar financial obligations. There is next to nothing taught at school about even the simplest of financial tasks, you can feel all alone trying to figure it all out. Follow these 6 smart financial tips and they will help you to stand you in good stead and keep your money under control.