Most people want quick, easy tips about money to use so they don’t have to delve into it in too much depth. This is why we are giving you some financial tips for young people.
It is difficult not to make a big purchase when you finally receive your first real paycheck after graduating from college. Although it is tempting, it may be wise to consider a few other options before splurging.
1. Young Adults Should Pay cash for big purchases
If you can’t pay for it in cash, you can’t afford it. There are a few exceptions such as investments, mortgages, etc. however in general this is a good rule to follow. High interest rates will eat at your new paycheck and keep you from getting the most from your money. Putting off large purchases until you are able to pay for them in cash is a great way to prevent unnecessary purchases. Young adults also are tempted to buy things on credit cards. It is a good practice to start building your credit while you are young, but only if you do so responsibly and pay off your balances every month.
2. Young People Need to Create a budget
Knowing where your money is going is the first step in controlling your spending. Once this is determined, a budget can be created in order to prevent frivolous spending and create savings and investment goals. No matter what, you should always “pay yourself first”. Set an amount that you would like to save each month, and create a budget based on what is left over. Take it a step further and automate your savings to be invested elsewhere so that you don’t ever even see that money. This is not only an efficient way of saving, but before you know if you will have accumulated a hefty sum of cash.
3. You are Never too Young to Start saving for Retirement
Americans are not saving nearly enough for retirement. Time is the most valuable asset when it comes to investing, so the earlier you start, the better. If your employer offers a 401(k) invest at least the amount of the match. Additionally it is a good idea to fully fund an IRA. If you become especially skilled at investing, you just may find yourself financially independent at a much younger age than is considered retirement age.
4. Start saving
Every purchase, no matter how small, counts. By making a few small changes and eliminating excess spending, you can easily start to accumulate a substantial amount of savings. Living frugally now before expensive life events occur is much easier than trying to save when you have a mortgage and children.
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5. It’s the Best Time to Focus on Your Career
If you can’t cut expenses, find a way to earn more. Moving your way up the ladder and proving your value while you are young will only help you in the long run when it comes to promotions. Changing jobs to something with more earning or growth potential is a great move to make while you are young.
6. Young Adults NEED to Learn About Investing
Investing can make you rich. In fact, it is passive income that can help grow your wealth on TOP of your income from your career, so you must take advantage.
Learn about investing before you jump in head first. I learned about investing by taking the short and easy Investing 101 Course (click the widget below to start learning)
Even making a few of these changes in your life now can have a serious impact on your financial well being. Hindsight is everything, and a common piece of advice is that they wish they would have started sooner. Making these a part of your life today will bring you one step closer to living in complete control of your finances.