Financial Tips for Young Adults

Unfortunately, money management is not a course that is commonly taught in school. Therefore many young adults come out of high school or college not knowing how to handle their finances. When it comes to handling finances when you get your first job, it’s better to learn from other people’s mistakes instead of making your own. Here are some things to consider to avoid financial hardship early on in adulthood.

Go to College

Even if you think you can’t afford to go to college, there are ways to make it happen for you. It is easier to get a degree when you are young then when you get older with more responsibilities. Your earning potential increases significantly with a college degree. You may have to take out student loans, but try not to borrow more than the amount you expect to earn the first year after graduation. You can also consider attending a community college for the first two years and then transfer to a four-year university.

Begin Retirement Planning

A lot of young adults don’t have the forethought to plan for retirement. Growing older is inevitable and you will be happy you planned ahead when it’s time to retire. Sign up for the 401K plan if your company offers it. If there isn’t a plan available, divert some of your money from your paycheck into an IRA. It’s much easier to set up automatic contributions to the account you choose. The money you don’t see, you won’t miss and it will be working towards your retirement.

Use Credit Sparingly

You may find that you have less cash when you are first starting out and you want things, so you pay with a credit card. It may seem easy now, but once that debt piles up, it is much harder to pay later. Use your credit cards wisely. You are relying on future earnings to pay for these purchases, and in today’s world, you can’t always count on that. Try to pay your balances off monthly, and keep them low.

Be Prepared for the Unexpected

Catastrophic things may happen. You can’t predict when and if they will happen, but you can be prepared. Prepare now by putting money into an accessible emergency fund. Try not to use your 401K or retirement fund for emergencies. It will cost you plenty to take that money out early. A good rule of thumb is to save at least 6 months of living expenses for emergencies.

Don’t take yourself and your job too seriously. Yes, this is your living, but you need to remember to take time for you. Spend at least one day a week in a recreational activity or hobby that you enjoy and take a minimum 1-week vacation annually. You will be prepared to enjoy life by handling your finances responsibly. Contact Carolina Money Minders today for further financial tips and help.