As young adults, we do have a care in the world regarding our finances. Most young adults are in high school/college. Irrespective of living at home, their parents support them. Thus, the thought of being financially independent rarely comes into our minds. Even schools or colleges do not teach us any subjects that talk about securing our finances. Or even how to start this journey.
However, you must start when you are young. It ensures that your safe financial habits make way for a better future. No doubt, your parents will always support you. Still, you need to be financially independent to ensure that you can manage money when living alone. Or when you get a job and start paying your bills.
Want to be financially independent as a young adult? Then, here are a few smart money management tips for you.
Set-up account with your local bank
When you are young and living in your childhood home, you do not think about setting up an account. However, that is the best time to set up a checking/savings account. When you have an account in the bank, you familiarize yourself with basic terms and procedures. A process like writing cheques or debiting money becomes easy, which helps when you start living alone. Also, it gives you a chance to understand how banks or any financial institution works, which is essential for all.
Lastly, having a bank account early on allows you to learn how to save and invest money. Any allowance you get should be in here (part of it), and it makes a ton of difference. Try https://www.greatsouthernbank.com.au/ to know what they have in stores for young adults.
Do not use credit cards
We see a lot of young adults using credit cards to buy anything they want. They do not think before purchasing because it’s their parents who are paying the bills. It is partially the fault of parents who allow young adults access to credit cards.
When you use credit cards, you buy anything you see or think you want. It leads to a habit of always buying things on credit without thinking about how you will pay for them later.
Instead, practice self-control! Think whether you want that pair of jeans or headphones. If you do, save for it. Every young adult gets an allowance or works a part-time job, which can help you pay. That is a better option instead of using credit cards any day.
Have a budget and do stick to it
Every youngster gets an allowance, as we mentioned earlier. Some do part-time jobs for it. Others get money from parents or birthday cheques from relatives and more. Whatever little you get, instead of throwing it all away, start saving a bit from it. To do this, make a budget. That should include everything- savings, money for snacks, or birthday gifts, and more.
Whatever you think should be part of your budget, write it down. Now, allot some amount for everything and save at least 10-20% of the entire allowance you get for a month. This little habit will become a routine for you and help you have stable finances in the future.
Cut back on costs
If you are living in another city on your own, you need to save more. That you can do by cutting back on costs on various things, for instance, instead of getting take-out every day, try making food at home. You do not have to cook every meal, but try to cook most of them.
Also, make a list of things that you are thinking of buying. Now divide it into wants or needs, and then only buy the stuff you need immediately. For anything that you want, start saving.
Get a side job
A side-job can help you save a bit of money. There are many jobs that youngsters can do without worrying about being overburdened. For instance, babysitting or dog-walking can all help you save and manage money.
You can even work at a local cafe or shop if allowed in your region. That not only helps you save money, but teaches you how to manage work and studies, which is great for a professional life.
Keep track of debt and do pay them on time
Sometimes young adults nearing college age or in the last year may borrow money from friends/relatives. Or may even borrow from a bank. It is not a bad thing as borrowing money does help your credit. The worse thing will be, however, to not pay it on time. If your debt keeps accumulating and you are nowhere near paying it off, that can be a problem. Too much debt can put a strain on relationships and your finances.
Thus, evaluate your debt and start paying it off. Look at all the debt and check which has the lowest interest rate and start with it.
Take charge of your future
If you want to be financially independent, you need to start learning a thing or two about finances. You cannot keep asking random people for advice. Even some experts may try to take advantage of you if you do not know how to manage finances. Thus, you must read articles or books or research how to manage finances.
Regularity is imperative when it comes to being financially independent. That means, parents should be regular with giving allowances. Youth should be regular with saving money and investing it in their bank and more.
No age is early to start learning about finances and how to manage them. Even parents and teachers should start making young adults and teens learn about the importance of managing money. Start with a small task of saving money and go from there. What we learn at home and school can be a big life lesson. As for the youth, learning to be financially independent early on has many benefits. So, let go of bad money spending habits to have a secure financial future.