The Eight Personal Financial Tips For Young Adults
It’s unfortunate that personal finance is not a compulsory subject in college and high school yet. This is one of the reasons why so many are fairly clueless when it comes to money management in the real world. Getting started is the hard part. So to help you understand what you need to know about personal finance, here are eight powerful tips that will guide you to living a worry-free financial life.
1. Learn Self-Control
You may be lucky to have learned self-control from your parents as a kid, but If not, self-control is a skill that will help you keep your finances in order. It is not a crime to effortlessly buy stuff any minute you want, but it’s advisable to be patient till you’ve actually saved some money.
If you continue with the habit of pulling out your credit cards all the time to make a purchase, regardless of whether you can pay the bill in full at the end of the month or not, you may head down the wrong path. In 10 years time, those bills might still be a bone for you to crack. If you are going to use them, ensure you always pay your balance in full when it’s time to do so and also avoid carrying more сrеdіt саrdѕ thаn уоu саn kеер trасk оf.
2. Tаkе Control оf Your Own Fіnаnсіаl Future
Take control of your financial future by learning to manage your finances, or else others will help you mismanage it. Take charge and read a few an excellent books about personal finance and stop relying on others for advice. That way you won’t end up getting help from unscrupulous commission-based financial planners.
This is one of the best tips I can give you for getting started. Arming yourself with personal finance knowledge will make it tough for anyone to catch you off guard; even family members that require you to spend unnecessarily at times. Avoid friends who want you to go out every weekend and blow money around. Your understanding and knowledge of how money works is the very first step toward making your money work for you.
3. Always Know Where Your Money Goes
It is critical for you to manage your expenses and be certain you aren’t spending more than you make. This is where budgeting comes in. Budgeting is vital to keeping you on a healthy track. It will give you insight to what small, manageable changes you need to make in order to achieve your ultimate goal. Without a doubt, budgeting will have a significant impact on your finances.
Additionally, try to keep your recurring monthly expenses as low as possible. This will help you save big bucks over time. The money you waste now on a posh apartment could buy you a glamorous house before you know it.
4. Start an Emergency Fund
Pay yourself first. This is one money rule that will help you save a lot of money for the future. No matter how much you owe, how low your salary is, or even how much credit card debt you have, it’s wise to pay yourself something. Find an amount, no matter how small and pay yourself by saving it in an emergency fund every month.
An emergency fund helps you sleep better at night and keeps you out of financial trouble. If you learn this habit early, very soon you’ll see a good return. Saving early on will surprise you. You could end up with enough money for a down payment on a house, or better yet, possibly even enough to purchase it outright.
Put your money in a high-interest online savings account and don’t just keep it under your mattress. Make sure you have a money market account or certificate of deposit. Otherwise, inflation will erode the value of your savings.
5. Save for Retirement Now
Next, one of the best decisions you can ever make about retirement is to start saving now. Just as you started your journey by first enrolling in kindergarten, in the same way, you need to prepare and save up for your retirement in advance. Use compound interest to your advantage. If you start saving, soon you’ll see working as an option rather than a necessity.
Embrace company-sponsored retirement plans too. They are an excellent choice when it comes to putting your pretax dollars somewhere. Another perk to those are the contribution limits tend to be high. Also, most companies оftеn mаtсh раrt оf уоur соntrіbutіоn, which іѕ lіkе getting free money.
6. Get a Grip on Taxes
Knowing how income tax works even before your first paycheck is important. You need to understand how to calculate whether your salary is enough money after taxes. That will let you know if you can meet your financial obligations and goals. There are a variety of online calculators out there that will help you determine your payroll taxes. These online calculators help you calculate how much goes to taxes and how much is left. An online calculator also shows you your gross pay and net pay, which is your take-home pay.
For instance, $35,000 a year in NY will leave you with around $26,430 after taxes without exemptions, or around $2,032 a month. Also if you’re in search of a salary increase and considering one job over another, you’ll need to understand how your marginal tax rate will affect your salary. An increase from $35,000 a year to $41,000 a year won’t give you an extra $6,000 (or $500 per month) like you think. You’ll actually only get an extra $4,129, or $344 a month.
Learn how to prepare your annual tax return yourself as there is a lot of misinformation and bad tax advice floating out there.
7. Guard Your Health
Don’t wait any longer to apply for health insurance if you don’t have it already. Meeting monthly health insurance obligations are necessary and not impossible, You’ll see the benefits in the long run. Why pay thousands if you end up in the emergency room for a minor broken bone? The cost will save you significantly if you’re insured.
Get quotes from different insurance companies. Searching for lower rates keeps more money in your pocket. Don’t forget to take daily steps maintaining a healthy weight by eating fruits and vegetables, exercising, avoiding excess alcohol, not smoking and even driving defensively. You’ll be grateful later when you realize you aren’t paying exorbitant medical bills.
8. Guard Your Wealth
Take steps today to ensure your hard-earned money doesn’t vanish into thin air by taking a drastic step towards safeguarding your wealth. Get renter’s insurance, disability insurance, whatever type of insurance that benefits you. In the long run, these guard your health and your wealth. When the need arises, the insurance is there to provide you with a steady income. Especially if you ever become unable to work or face a tragedy such a burglary or fire.
Find a fee-only financial planner to provide unbiased advice if you want help managing your money. This is better than a commission based financial advisor who is likely more interested in earning from you than for you. Also, try to protect your money from taxes and inflation with your retirement account. Earn interest on money market funds or interest savings accounts which usually give high-interest rates.
Above are eight valuable tips for getting started. Always keep in mind you don’t need a special background or degree to manage your finances. Follow these fiscal rules I assure you, that you will be financially prosperous.