7 Finance Tips Every Young Adult Should Live By

7 Finance Tips Every Young Adult Should Live By
  • Opening Intro -

    As a young adult, now is the time to get serious about your finances.

    You shouldn’t wait to be smart about your money just because you’re still young.

    You won’t be young forever.

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What you do with your finances now will follow you as you grow, which means you need to take a good long look at how you want your future to unfold.

These seven finance tips are something every young adult should live by to ensure a healthy financial future.

1. Create a Budget

Creating and maintaining a budget is one of the most important things you can do for your finances. It should absolutely be the first thing you do.

If you’re not sure how to start, that’s perfectly fine!  There are plenty of budgeting apps available to help you figure out your monthly finances.

A budget will give you an accurate idea of how much money you make, how much money you spend, and how much money you can put into savings.

Are you stuck on the right amount to split between spending money and savings? Try incorporating something such as the 50/30/20. It splits your income by percentage with 50% going to necessities, 30%  going toward your entertainment, and 20% relegated to your savings.

It will help if you make a list of everything you pay for monthly such as bills, streaming services, etc. That way, if you find yourself needing to cut back, you can more easily find things you can cancel. And sticking to your budget is just as crucial as making it.

2. Pay Your Bills First

Your bills should always be your number one priority. These are the usual monthly expenses that you can’t get around paying for — your phone bill, car payment, rent, and utilities. The things you need.

(And no, your Netflix subscription doesn’t fall into this category.)

No matter what your budget looks like or how carefully you plan, always use your money for your bills first. Then you can move onto allocating it to savings or spending it on takeout.

By putting your bills first, you always ensure you have enough to pay them. And that’s a great feeling to have.

3. Be Smart About Your Credit

Your credit score determines how much money you can borrow in the future for things like a car or a home. It’s imperative to keep it as high as possible. And you can only do that by using your credit wisely.

So as much as your friend wants you to co-sign on that loan, it may not be the best idea. If you’re able to, only keep one credit card at a time. Try to only use around 30% of the credit limit on that credit card. If you need to use more, make sure you can pay it off before you do.

Only use your credit card to buy something that you know you already have the money for or will have the cash for before the bill comes due. And pay your credit card bill in full every month!

Keep track of your credit score by checking it at least once every six months. You need to know if there’s some reason your credit score goes down. Especially if it’s because someone is using your identity for their own means.

4. Keep an Emergency Fund

You may not think building up an emergency fund is necessary right now, but it’s better to be safe than sorry when it comes to your finances. Without an emergency fund, one unplanned happenstance could set you back for years.

You’ll want to have at least a couple hundred dollars set aside for anything that goes wrong. When something you weren’t expecting comes up, the damage won’t be nearly as significant because you can take care of it in part, if not wholly. Don’t dip into this fund no matter what. It’s there for emergencies only.

It could also benefit you to keep a fund in the event that you end up losing your job unexpectedly, or you have to leave your job for any reason. Keep enough money around that will keep you afloat until your new job kicks in.

5. Plan for Your Retirement

Retirement? But you’re in your early 20s. Why should you care about retirement?

Listen, it’s never too early to start planning for the day when you finish working. That day will come, and if you don’t have your ducks in a row, you could be looking at an empty pond. Or, you know, an empty wallet.

A 401(k) is a tried and true option that many employers offer when you start working with them. Sometimes they’ll even match what you put in.

If that’s not an option, look into a Roth IRA. The money that goes in will be taxed as you invest it, but when you take it out later in life, it will be totally tax-free!

Whatever road you decide on, set yourself up for the future right now. It’s the best thing you can do for yourself.

6. Make Wise Investments

Learn about investing by talking to people that know about investing. It’s never too early to talk to a financial advisor. Most people wait until they have mountains of money or a problem with their finances to find someone to talk to.

Get ahead of the game and educate yourself asap! A financial advisor can set you on the right path early on so you can lead your life with your best foot forward. They know what they’re talking about, and they can help you make the best investments for you. It’s their job!

By investing, you’re earning more money for later down the line. Sometimes a little risk is good for you.

7. Always Carry Health Insurance

Health insurance plans are more closely tied to your finances than you might think. Carve out as much as you need to get the perfect health insurance plan for you. Make it a necessity. Don’t compromise on it, even if you think it’s the best thing to do.

Staying healthy and carrying health insurance will save you a lot more money than it will cost you down the line.

Though it doesn’t happen every day, you never know when you may need to see a doctor or even go to the emergency room. Without health insurance, these visits could cost you a pretty penny.

other valuable tips:

Shop around a bit and find the right health insurance plan for you. And make sure you take good care of yourself, so you have less chance of having a lot of medical bills later on in life.

In Conclusion

There’s no reason to put off learning about your finances. After all, your financial health could determine a lot about your life, just as any other kind of health does.

These seven finance tips are here to help you avoid any serious mistakes at all costs. They are things you should start implementing now and continue to live by as you make your way through adulthood.

Adulting is never easy but, these tips will make it a little less difficult for you.

Author Bio:
Karen Lein is the General Manager of Copper Beech Townhomes and Grove San Marcos. She is a Fresno State alumna and enjoys traveling and watching football. #GoDogs

Image Credit: finance tips for every young adult by Pexels

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Consumer Tips reference:

GUIDE: using the equity of your home

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