Start Young Adulthood on the Right Financial Foot
Before spending your very first paycheck, here is some financial advice for young adults. These money management tips are going to be the foundation for your future. When you are in your early twenties, these goals may seem too far off to be concern yourself with, but today’s economic reality is not the one previous generations faced.
Financial Advice for Young Adults-Save, Save, Save
Sure, it is tempting to spend your entire paycheck on fun, toys, vacations, and clothes. You studied hard, now you work hard, you deserve it, right?
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What many young adults do not comprehend is that the younger you are, the easier it is to save money. This money management tip is true-ask anyone who has gotten married, bought a house, or has children. It’s hard to save when you have two kids in braces or a house that needs a new water heater!
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When you graduate from a place of higher learning, whether it be a four year university, a two year college or a technical school, you will have to spend money on wardrobe basics when you land your first job. Consider this an investment in your future.
Ladies, this does that mean you have to go shopping for a Chanel suit, a Marc Jacobs handbag and Manolo Blahnik shoes. And guys, no Armani suits for you, either. Buy good quality basics, add to your wardrobe a little at a time, and when you can afford to, you can upgrade your wardrobe. Invest in classic accessories that will last for years and not need to be replaced.
If you are living at home, you have the (hopefully) once in a lifetime opportunity to sock away almost all of your paycheck. Offer your parents some money for rent and food, and then save the rest. This is money management at it’s best.
Financial Advice for Young Adults-Avoid Credit Card Debt
This tip for money management should be taught at schools from the time kids can understand what credit card debt is. You should not get yourself financially in the hole for clothes, food and vacations. If you cannot pay your bills, this will damage your FICO score, which will in turn make it harder for you to get a mortgage when you want to buy a home or get a loan for a car.
If you are able to secure financing even though you have debt, rest assured that it will be at a much higher percentage than a person who has no credit card debt. That ski vacation to Vermont that you could not pay in full will cost you thousands more in the future with higher mortgage payments.
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The Final Financial Tip-Start Saving for Retirement Nowï¿¼
One of the best money management tips is to start your retirement fund while you are young. Whether it is a 401K (hopefully with matching money from your employer, which is free money for you), a 403b, a Roth IRA or any other kind of retirement account, open it! The beauty of compounding interest is that the earlier you begin to set aside money for your future, the more money you will have for it.
The later you open a retirement account, the more you will have to put into it to get to your financial retirement goals. And the older you are, the more likely it is that you will have a family to support. The extra money to achieve your goals may not be there.
This financial advice for those starting out in life is just a springboard for a better future. These three tips for money management will give you a strong foundation for everything you want to achieve in your future.