Financial Tips for Young Adults
Life in your 20s can be a whirlwind of activity. College, new careers, relationships, and new cities can be exciting and stressful in equal measures and this time in your life can easily get overwhelming. In the midst of the activity, many young adults lose track of their financial goals and end up overspending, saving very little, and find themselves getting into financial tough spots down the road. Here are four tips to keep in mind now that will help you be more financiall secure in the future.
It’s tempting to think you need that $500 handbag or $200 shirt calling to you in the department store window. However, overspending is one of the reasons why young people today are facing a mountain of debt. The best way to control spending is to make a monthly budget. What do you make? How much of that is leftover once you factor in bills and living expenses? It’s okay to reserve a little each month to spend on splurges, but these should be limited and always fit into the plan.
Build an Emergency Fund
You might be living the high life right now with a high-paying job and limited living expenses, but that can change in an instant. Job loss, illness, or other circumstances can easily leave you in a desperate situation. When you put away money each month into an emergency fund, you have a fallback if your suddenly lose your income and can use this cushion to search for a new job without becoming homeless.
Start Saving Now
In your 20s, retirement seems like a lifetime away. However, if you start saving for it now, the interest you build will multiply and you will put yourself in a very good situation for the future. Even if you can only afford to invest $25 or $50 a month, this is still a great start and you can always build on it as your income increases
Those shiny credit cards that come in the mail are incredibly tempting. You can always pay them off down the road when you make more money, right? Too many young adults rack up credit card debt with no thought toward the interest charges or the fact that all this money needs to be paid back. In doing so, they ruin their credit and dig themselves a big hole for the future. Keep one credit card on hand for emergencies and cut up the rest.
Though most young adults are more focused on building a career and family than they are on their finances, just a few different financial choices can set them up for a bright and successful future. If you’d like more tips on managing money, please visit our website.