The real world is expensive, and if you are a young adult the lack financial aptitude will harm you later on in life. Being financially unaware will make you struggle not only fiscally, but emotionally as well. That’s why you need to acquire financial skills as you make your way through college, navigate your first job and learn to save for the years to come.
College-bound
College is often the first time you will experience a real sense of freedom. Gone are the days of a traditional school schedule with parents and teachers standing over your shoulder to make sure you study, eat and complete your assignments.
College may also be the first time you are faced with managing your own money to cover bills, school expenses and inevitable loan payments. To help keep you from failing Personal Finance 101, we recommend establishing a budget.
Record income from sources such as part-time job, student loans, money from parents, grants, savings accounts and scholarships.
Then record expenses: things such as books, tuition, rent, clothes, entertainment, college fees, supplies, personal care items and transportation costs. By tracking the first two months of spending, you will earn an accurate baseline of necessary and unnecessary spending and where’s there’s room in the budget for saving.
On the job
The thought of saving for retirement after securing the first job out of college may seem ludicrous.
After all, you still need to pay off college loans, rent, car payments and insurance fees.
However, saving for the future as soon as possible and investing in employer-matching retirement programs with the max amount possible are smart financial moves, according to The Balance writer Miriam Caldwell.
Remember the budget you used in college?
Now is the time to update if for the real world. Tracking your income, expenses and spending is the only way to gain control of your finances. As you progress in your career, your financial health should become more robust.
Be sure to consistently evaluate and re-evaluate your budget, plans for the future and investment options.
Credit cards are convenient, and sometimes the only resource you have to get through stressful financial times. But, they come at a high price. Sinking into credit card debt happens quickly and before you know it, you’re over your head in fees and balances you can’t clear.
To help you stay afloat, forgo any dependence on plastic.
In case of emergency
Life will throw you expensive curveballs, and without an emergency fund, your financial health will take on serious damage.
According to Investopedia writer Amy Fontinelle, any amount you can save each month in a money market account, certificate of deposit or online savings account will do wonders in establishing your financial safety net.
Be sure the account you choose earns high-interest rates, too.
By adopting smart money habits, like budgeting, you’ll create a lucrative and secure future.