8 Financial Tips For Young Adults
We're sure everyone has wished that high-school had prepared us better for certain things in life - financial management being one of them. It can be...
We’re sure everyone has wished that high-school had prepared us better for certain things in life – financial management being one of them. It can be overwhelming leaping into the strange world of taxes, budgets, retirement and planning around your security and financial peace of mind. Amy Fontinelle from Investopedia takes us through a couple of seriously helpful tips to get you on top of your personal finances.
1. LEARN SELF-CONTROL
It’s a hard one, but it’s worth it. The first step to keeping your financial life running smoothly is purchasing only when you have the money. Even though buying on credit is oh-so-simple, it’s the kind of habit that won’t do you much good in the long run. Debt is often inevitable, but understand how it works and how credit card interest works is important to managing your debt and finances in such a way that you are the one who benefits, not credit card companies.
2. TAKE CONTROL OF YOUR OWN FINANCIAL FUTURE.
“If you don’t learn to manage your own money, other people will find ways to (mis)manage it for you…” A good point that Fontinelle makes. Take some initiative and read some basic books on personal finance to form your own opinions and plans, instead of relying on the advice of well-meaning uncles and that nice lady at the bank. She adds, “Understanding how money works is the first step toward making your money work for you.”
3. KNOW WHERE YOUR MONEY GOES
The best way to make sure your expenses don’t exceed your income, is to set up a good budget. Once you start tracking your expenses, you can see how small purchasing decisions you make every day can really add up to help you save your money and enable you to buy that car or invest in that home.
4. START AN EMERGENCY FUND
“Pay yourself first” is a good mantra to stick to. Even if you have student loans to pay off or if your salary isn’t so impressive, it’s always good to put a little into an emergency savings account each month. Make it a non-negotiable expense, just something you do as you pay the bills every month – you pay yourself. Don’t just put this emergency fund anywhere, put it in a high-interest online savings account, a certificate of deposit or a money market account. Otherwise, inflation will get the better of you.
5. START SAVING FOR RETIREMENT NOW
We know… youth seems eternal, you’re all about the present, living in the moment and anyway – you’ll never retire (it’s an old-fashioned concept)! But in your older years do you really want to be worrying about finances? Nah, you want to be aging in style and lushing out in the best way possible. The way compound interest works, the sooner you start saving, the sooner work becomes an option instead of a necessity.
6. GET A GRIP ON TAXES
Understanding how income tax works is vital to managing your finances. You need to know how to calculate your finances after tax so you can meet your financial requirements and obligations. It’s also a good idea to understand how your annual tax return works. Seek out the right information and always get a second opinion. SARS is a drag, but once your tax management is in order, you’ll sleep better at night.
7. GUARD YOUR HEALTH
Health insurance may seem like unnecessary income drain, but really it’s the best way to ensure peace of mind and protect yourself. Accidents happen all the time. A car accident or tumble down stairs could undo your entire year’s savings or worse. Do your research and find the best value for money health insurance plan that works for you, don’t be nervous to shop around and ask as many questions as you need to. You can also take daily steps to keep yourself healthy and fit that will prevent doctor’s bills… You’ll thank yourself in the future.
8. GUARD YOUR WEALTH
Things like renter’s insurance or disability insurance (which will provide you with a steady income if you ever become unable to work for an extended period of time due to illness or injury) are the kinds of things that will keep your hard-earned money safe. If you feel like you need assistance managing your money, you can always find a trusted fee-only financial planner to help you out and offer objective and sound advice.
As Fontinelle adds, “…You don’t need any fancy degrees or a special background to become an expert at managing your finances.” You just need to take control, be a bit savvy, do you research and keep focused to get the most out of your money!
Read the full article right HERE.