It is unfortunate that personal finance is not a required course in high school. That is no excuse to neglect your finances. Bills have to be paid and common sense tells you that your income needs to exceed your expenses. As a young adult, it is easy to fall for the trappings of seemingly easy money. Young people are targeted by banks and lenders. Your mailbox is guaranteed to spit out a credit card offer almost every day. So how do you keep on the financial straight and narrow? How do you plan for the future when it feels like you are living paycheck to paycheck? Here are some things you need to know about money and finances.
- Self-Control – You do not need all things. The sooner you learn self-control the sooner you’ll be able to grasp the art of personal finance. Resist spending money you do not have. Racking up a credit card bill on superfluous items is ill advised. The interest on credit cards can have you paying for those treasured items for years later.
Just because a lender is willing to loan you money, doesn’t mean you can afford the loan. You are better off in most situations to simple save for high dollar items. Buy a car you can afford. Take evening or online classes at a school like Maryville, so you can still work your way through college. Consider renting instead of purchasing a home. Debt can be an anchor and practicing self-control helps.
- Take Control of Your Future – It is time to learn to manage your own money. Today. Don’t dig yourself into debt trying to build somebody else’s future for yourself. Your family will always come up with something to worry about. If it is not the fact that you don’t own your own home, it will be something else. Know your limits and what you can afford.
Stop relying on other people for advice. Purchase some books on money management and personal finance. Better yet, rent some from the library. Once you understand how money works, you can start making it work for you. Until then, don’t blow all your hard earned money on a weekend bender with friends. Your future self will thank you.
- Budget – Start tracking your spending now. Until you know what you are spending your money on, you cannot make wise decisions about finance. Take a month to track every dollar you spend. Your expenses should never exceed your income. Eating out every night might not seem like much, but it adds up quick. The fastest way to make more money is to spend less.
Pay attention to your recurring expenses. During that month that you track your expenses, take the time to look over your bank statement as well. You might have subscriptions and other recurring bills that you forgot about. Reduce these monthly expenses as best you can. You probably don’t need cable, Netflix and Hulu. Explore cheaper phone plan options. Make an actual budget. Assign a dollar amount to categories of expenses. You should know approximately what your rent, utilities and other bills cost monthly. Set limits for entertainment and stick with them. Review your finances at the end of each month to help you stay on track.
- Save – It is important to put money aside for emergencies. Open a savings account and add money to it religiously. Determine a reasonable amount that you set aside from each paycheck, even if it is only ten dollars. When your car breaks down, you will be glad you did. Setting financial goals is a great way to encourage yourself to save even more. Have your emergency fund, but also have a piggy bank for fun. Add to it regularly with a specific goal in mind.
It is important to get a hold on your finances early. It is never too late to create a budget. Know what you can afford, so you can make wise financial decisions.