Financial knowledge for young adults? What are you even saying? Isn’t it for the elderly? I mean, hello, I’m a teenager! The last thing I want to learn is probably how to manage money.
Wait a minute. Do you think like that? You need to change the way you think! Seriously!
For various reasons, learning about finances when you are young is probably best for your adult years.
- You won’t have to stress out: “Crap, I’m an adult now!” while worrying about managing your finances and being independent.
- You don’t need to dig through every manual searching for your first yet best credit card in Canada.
“Investment in knowledge pays the best interest!” – Benjamin Franklin.
The quote also implies that the earlier you start your financial journey, the more chances you can have to build the future you want. So, let’s dig into some tips that can help you do that:
1. Preach Self-Control When It Comes To Spending!
It takes time and patience to change bad habits! You must have heard the saying numerous times.
For example, suppose you are in your late 30s and have just recently started a good job. However, you never practiced saving money or holding yourself before spending big chunks on random things.
And, then you think, argh, why is it so hard to save money?
Because, my friend, you never practiced doing it! Here comes our tip#1 to the picture.
- Got your eyes on the latest Jordan? Don’t go straight into buying it.
Instead, save the money first and then use the cash for the purchase.
- Of course, using a credit card early is ideal for building a good credit profile.
However, if you have a habit of “spend first, think later.” you’ll have to deal with high interest, debt, compromised scores, and other consequences in your adult life.
2. Search & Learn How Money Works!
Teens and kids should learn about financial literacy and money management in order to prevent saying, “Oh, I wish I understood things earlier.”
However, you can’t make a 21-year-old ace the budgeting and bucketing rules. Simply put, the strategies to guide teens about money differ from money management hacks for adults.
- Talk to your parents and try to share their experience and knowledge.
- Even if you are not earning a high income, you can start learning how money works by budgeting your allowance.
Divide your pocket money into envelopes for investing, saving, and spending to get started. This can help you prepare for what you should do with your money when you become an adult.
3. Categorize Your Needs & Wants!
Keeping track of your personal finances can be difficult, especially when you find yourself suddenly needing to spend money on a variety of items you had never really intended to buy.
You must distinguish between what you need and what you want in order to prevent getting into debt. Yes, these are two different concepts!
- Needs: Any expense you can’t avoid if you are independent. It includes all the bills you must pay, like utilities, groceries, clothing, etc.
- Wants: Anything that isn’t necessary for your survival—for instance, a gaming chair, a new Xbox, delivery food, and everyday night outs.
Your teenage years are the ideal period where you can try smart money management hacks to ensure you are not sending bad decisions for your future self.
4. Focus On Your Credit Health!
To obtain your first credit card, you must be of legal age, but that is all.
When you hit that threshold, you must sign up for a basic card that won’t put you in debt. Instead, setting your credit history earlier will put you in the right direction.
- It can help you get a good interest rate on your student loan,
- You can get better terms on your first mortgage,
- If you decide to launch your business later, you can also gain the lenders’ trust.
Understanding credit as a teen can help you as you grow in your life, both financially and personally.
5. Draw A Line Between Your Income & Expenses!
Every finance expert focus on teaching two things to young adults:
- Firstly, watch what you are earning!
- Secondly, never let that income exceed your spending amount!
It’s crucial to completely comprehend these ideas when you’re a teenager because if you don’t practice excellent money habits at a young age, your adult years will be lost trying to make things right.
6. Educate Yourself On Investment & Debt!
To ensure your money doesn’t vanish during the first week of the month, you need to start educating yourself on debt handling.
Not everybody is born with a golden spoon in their mouth. However, financial history is filled with experts who make their names and wealth from scratch by investing!
To name a few:
- Warren Buffet,
- Benjamin Graham,
- George Soros,
And so many others. Many people believe that increasing your income would resolve your financial problems. But regardless of your income, if you don’t continuously strive to control your spending, your account will be down to zero each month.
All the reasons why investment strategies to increase income and money management ways for debt handling go well together.
Many young folks dream of finishing college and beginning their first legitimate career only to achieve financial independence.
In fact, most of us are fortunate enough to do so. Yet, the majority of us get so caught up in the allure of independence that we fail to notice the list of unpaid things we are accumulating.
However, good news! As you are still in your young adult phase, you still have got plenty of time to try out different ideas and ways to set things right. Are you stuck in finding the right strategy to correct the wrong financial decisions of your youth?
Well, you are at the right place!
This comprehensive yet easy-to-understand guide will teach you all that you need to know to be financially independent, like a pro as a young adult.