Studies have shown that 83 percent of teens do not know how to manage their money. While under their parents’ care, this might not be a big deal, but in just a few years these teens will be young adults, responsible for their own finances. This is the reason why a young adult needs to take a serious and active role in his or her finances. Consider the following financial tips that will teach you 8 simple lessons, which will pave the way for a bright financial future.
1. Save as Much as you can
One good tip for young adults, and perhaps the most practical is to strive to live off a small amount of your income. This will allow you to save more, which will give you a good cushion as you age. Make cuts where possible, like eliminating unnecessary expenses or not eating out so much. Your goal is to put away more than 10 percent of your income.
2. Strive to Live Debt-Free
You have probably acquired a credit card or two. Perhaps, you have seen credit card offers coming in the mail. Be careful and wise. Don’t get a credit card for frivolous spending. Use your credit cards for emergencies, and pay your balance off each month. Credit cards come with interest, which is basically money you will give away for free.
3. Redefine Your Needs
Consumerism has made it easy to confuse a need with a want. Needs are necessities in life, which include food, shelter, and self-care items while wants are desires. Desires are not vital. Make a list of what is necessary and what is not, which will make it easy for you to remove unnecessary expenses.
4. Spend Carefully
There should be a small amount of money allocated each month for spending on non-vital items like fun activities. The amount spent should be small and should not leave you penniless. Set aside money for trips and leisure travel so that your budget stays intact.
5. Build a Few Streams of Income
Smart investments can definitely be one stream of income, but there are others. For example, several phone applications give people the opportunity to offer people rides around town for a little cash. Another stream of income could be a self-funded small business of your own. Digital real estate is the way to go in these modern times. Websites have low startup costs and can offer you a big return.
6. Live Within Your Means
Too many people live beyond their means, which is why some people max out credit cards. These are tools that people often use to buy something their income may not afford. You should not use your credit cards or dip in your savings just to have a little fun. Practice more self-control if you feel this is necessary.
7. Set up Different Savings
There are many types of emergencies, and you should have a savings for each one. Of course, you may not be able to predict every emergency, but there are some common ones like the following:
- Medical problems
- Car issues
- Family emergencies
- Unexpected financial crisis
- Loss of a job
8. Rethink Your Bank
Another good tip is to choose a local credit union like Eastex Credit Union . You do not have to worry about additional maintenance fees or fees for using an ATM. There are many benefits that help members save money. The key difference between credit unions and regular banks is that we look out for our members.