Personal Finances: Start When You Are Young!
Many young adults who are leaving home for college or a career are clueless about money. If you are one of these life-newbies, out to conquer the world, you will have no problems if you learn a few things about money, finances and the future! In this article, you will find some great advice that will set your steps on the path to becoming a financially responsible adult!
First things first: create a budget. If you are new to being independent, remember that life will likely be different now that you’re on your own. Make a comprehensive list or spreadsheet of all your bills and expenditures, estimating for the unknowns, such as groceries and gas. Make sure your income will cover these expenses, and if it won’t, find any unnecessary expenses that can be eliminated.
Find a bank that offers a personal banker. These people will guide you, free of charge, suggesting the best checking and saving options for your situation. Be sure to ask questions regarding the bank’s policies on things like ATM fees, monthly fees and any “hidden” expenses you may not be aware of.
It may sound like bad advice, but it is important to open one credit card account. Do this only if you are sure you are able to avoid abusing it! Use the card to make monthly purchases, such as gas and groceries, then pay it off each month to avoid finance charges. This is important for young adults, because it helps to build a credit history for future financial needs, such as home or automobile loans. You can even look into finding a card that offers a reward system such as cash back and earn a little extra money.
When you are just starting out, it is crucial that you pay your bills on time. Remember, you are building a credit history that will follow you throughout your life, and every late or missed payment lowers your credit score. If you have a problem paying a bill, don’t ignore it. Call the creditor and ask to negotiate a lower payment that month. Some creditors even offer to skip a payment once a year to help you out. It never hurts to ask, and it may save your credit!
Look into automatic bill-pay. This service is now provided at most banks and can usually be set up online. It can offer you peace of mind when you know your bills are being paid on time, instead of hiding unpaid in a drawer or piling up in-between homework!
Keep your yearly taxes in mind at all times. You can get free tax advice if you ask your banker or look online. Think carefully about whether or not to claim yourself as a dependent on tax forms at work. You will get a little less in your paychecks if you claim 0 dependents, but at tax time, you are more likely to get a refund.
Think about health and life insurance. Health insurance is imperative, so if your employer offers it at a low cost to you, don’t hesitate to buy it. If it isn’t offered, look into other insurance options. And remember, life insurance is cheaper when you are young, and you may be able to dip into it someday when you need money for a large purchase, such as a home.
Don’t neglect saving money. Emergencies and other unexpected expenditures can crop up suddenly, so it’s important to have money set aside for a rainy day. Saving for retirement is also important, and if your company offers a retirement account, or 401K, it is wise to contribute. Remember, the future comes quickly, so be prepared!
Becoming an independent adult is an exciting time. Don’t let money issues cramp your style and negatively impact your future! Use your knowledge, along with these tips, and you will be well on your way to financial independence and a lifetime of success!