8 Financial Tips For Young Adults

AAA

Unfortunately, personal finance has not yet become a required subject in high school or college, so you might be fairly clueless about how to manage your money when you're out in the real world for the first time. If you think that understanding personal finance is way above your head, though, you're wrong. All it takes to get started on the right path is the willingness to do a little reading - you don't even need to be particularly good at math. To help you get started, we'll take a look at eight of the most important things to understand about money if you want to live a comfortable and prosperous life.

1. Learn Self Control

If you're lucky, your parents taught you this skill when you were a kid. If not, keep in mind that the sooner you learn the fine art of delaying gratification, the sooner you'll find it easy to keep your finances in order. Although you can effortlessly purchase an item on credit the minute you want it, it's better to wait until you've actually saved up the money. Do you really want to pay interest on a pair of jeans or a box of cereal? If you want to keep your credit cards for the convenience factor or the rewards they offer, make sure to always pay your balance in full when the bill arrives, and don't carry more cards than you can keep track of.

2. Take Control of Your Financial Future

Instead of relying on others for advice, take charge and read a few basic books on personal finance. Once you're armed with personal finance knowledge, don't let anyone catch you off guard - whether it's a significant other that slowly siphons your bank account or friends who want you to go out and blow tons of money with them every weekend. Understanding how money works is the first step toward making your money work for you. (Refer to Investing Books It Pays To Read for a list of a few to get you started)

3. Know Where Your Money Goes

Once you see how your morning java adds up over the course of a month, you'll realize that making small, manageable changes in your everyday expenses can have just as big of an impact on your financial situation as getting a raise. In addition, keeping your recurring monthly expenses as low as possible will also save you big bucks over time. If you don't waste your money on a posh apartment now, you might be able to afford a nice condo or a house before you know it. (Read Define Your Personal Debt Redline to learn where to draw the line in your budget)

4. Start an Emergency Fund

Having money in savings to use for emergencies can really keep you out of trouble financially and help you sleep better at night. Also, if you get into the habit of saving money and treating it as a non-negotiable monthly "expense", pretty soon you'll have more than just emergency money saved up: you'll have retirement money, vacation money and even money for a home down payment. Don't just sock away this money under your mattress; put it in a high-interest online savings account, a certificate of deposit or a money market account.

5. Start Saving for Retirement Now

Just as you headed off to kindergarten with your parents' hope to prepare you for success in a world that seemed eons away, you need to prepare for your retirement well in advance. Because of the way compound interest works, the sooner you start saving, the less principal you'll have to invest to end up with the amount you need to retire, and the sooner you'll be able to call working an "option" rather than a "necessity". Company-sponsored retirement plans are a particularly great choice because you get to put in pretax dollars and the contribution limits tend to be high.

6. Get a Grip on Taxes

It's important to understand how income taxes work even before you get your first paycheck. When a company offers you a starting salary, you need to know how to calculate whether that salary will give you enough money after taxes to meet your financial goals and obligations. Fortunately, there are plenty of online calculators that have taken the dirty work out of determining your own payroll taxes, such as Paycheck City. These calculators will show you your gross pay, how much goes to taxes and how much you'll be left with, which is also known as net, or take-home pay. (Read Fatten Up Your Take-Home Pay In 4 Easy Steps for more related information)

7. Guard Your Health

If you're uninsured, don't wait another day to apply for health insurance; it's easier than you think to wind up in a car accident or trip down the stairs. You can save money by getting quotes from different insurance providers to find the lowest rates. Also, by taking daily steps now to keep yourself healthy, like eating fruits and vegetables, maintaining a healthy weight, exercising, not smoking, not consuming alcohol in excess, and even driving defensively, you'll thank yourself down the road when you aren't paying exorbitant medical bills.

8. Guard Your Wealth

If you want to make sure that all of your hard-earned money doesn't vanish, you'll need to take steps to protect it. If you rent, get renter's insurance to protect the contents of your place from events like burglary or fire. Disability insurance protects your greatest asset - the ability to earn an income - by providing you with a steady income if you ever become unable to work for an extended period of time due to illness or injury.
  1. No results found.
Related Articles
  1. Taxes

    8 Financial Tips For Young Adults

    You don't need an MBA to learn how to save money and invest in your future.
  2. Investing

    When You Should Break Your Personal Finance Rules

    You've heard all the tried and true investment tricks, but do they really apply to you? Here are four rules that you may be better off breaking.
  3. Investing

    Women: Invest In Your Financial Literacy

    Learning about money may seem intimidating, but it's not as hard as it looks.
  4. Investing

    Portfolio Management For The Under-30 Crowd

    Young investors have some advantages over their older counterparts. Read on to learn how to build a portfolio that will grow with you.
  5. Personal Finance

    Hate Dealing With Money? Invest Without Stress

    There are a lot of options for investors who hate the hassle of investing. We go over some that will help your financial future.
  6. Personal Finance

    Are You Ready to Rent?

    If you think it's time to test your wings and leave your parents' nest, read on.
  7. Investing

    10 Ways To Prepare For A Personal Financial Crisis

    Life is unpredictable, but if there's anything you can do to stave off disaster, it's to be prepared and be careful.
  8. Personal Finance

    5 Steps to Building Your Financial Wisdom

    Financial wisdom is not about how much money you have, it's about how you've learned to manage your prosperity. Here are some tips on how to become wiser.
  9. Investing

    5 Reasons Why You Hate Money

    People often have a love/hate relationship with the Greenback. We provide five reasons for this ambivalence.
  10. Trading

    6 Steps To A Rule-Based Forex Trading System

    Learn to add structure to your trading methods with these six important steps.
Hot Definitions
  1. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  2. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  3. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
  4. Nonfarm Payroll

    A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number ...
  5. Conflict Theory

    A theory propounded by Karl Marx that claims society is in a state of perpetual conflict due to competition for limited resources. ...
  6. Inflation-Linked Savings Bonds (I Bonds)

    U.S. government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, ...
Trading Center