The real world is expensive, and if young adults lack financial aptitude, they will struggle not only fiscally, but emotionally as well.
That’s why you need to acquire financial skills as you make your way through college, navigate your first job and learn to save for the years to come.
College-Bound: Learn About Money Management
College is often the first time you will experience a real sense of freedom. Gone are the days of a traditional school schedule with parents and teachers standing over your shoulder to make sure you study, eat and complete your assignments.
College may also be the first time you are faced with managing your own money to cover bills, school expenses and inevitable loan payments.
To help keep you from failing Personal Finance 101, Shelley Elmblad, writing for The Balance, recommends establishing a budget.
Record income from sources such as a part-time job, student loans, money from parents, grants, savings accounts and scholarships. Then record expenses: things such as books, tuition, rent, clothes, entertainment, college fees, supplies, personal care items and transportation costs.
By tracking the first two months of spending, you will learn an accurate baseline of necessary and unnecessary spending and where’s there’s room in your budget for saving.
Start Saving for Retirement as Soon as Possible
The thought of saving for retirement after securing your first job out of college may seem ludicrous. After all, you still need to pay off college loans, not to mention rent, car payments and insurance fees.
However, saving for the future as soon as possible and investing in employer-matching retirement programs are smart financial moves, according to The Balance writer Miriam Caldwell.
Remember the budget you used in college? Now is the time to update it for the real world. Tracking your income, expenses and spending is the only way to gain control of your finances and create a financial nest egg, notes Caldwell.
As you progress in your career, your financial health should become more robust. Be sure to consistently evaluate and re-evaluate your budget, plans for the future and investment options.
Credit cards are convenient, and sometimes the only resource you have to get through stressful financial times. But, they come at a high price. Sinking into credit card debt happens quickly and before you know it, you’re over your head in fees and balances you can’t clear.
To help you stay afloat, Caldwell suggests foregoing any dependence on plastic.
“Other than buying a car or buying a home, you should try to pay cash for everything else that you need,” she writes. If you’re already saddled with debt, she recommends tackling it with a thoughtful plan so you can be debt-free as soon as possible.
Set Up an Emergency Fund for Financial Health
Life will throw you expensive curveballs, and without an emergency fund, your financial health will take on serious damage.
According to Investopedia writer Amy Fontinelle, any amount you can save each month in a money market account, certificate of deposit or online savings account will do wonders in establishing your financial safety net. Be sure the account you choose earns high interest rates, too.
By adopting smart money habits, like budgeting, saving for retirement and building an emergency fund as a young adult, you’ll create a lucrative and secure future.
Let Minster Bank Help You Get on the Track to Financial Success
Whether you’re just starting out with saving for your future or you have already started, the Private Wealth Management Team at Minster Bank can help you navigate your path to financial success. Contact an advisor today to get you on the right track.
Published by Minster Bank
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