For young people, financial independence is a major milestone in crossing over to adulthood. Becoming an adult means an increased number of responsibilities, not least of which includes financial responsibilities. Whether you're a recent college grad or a budding young professional, it is important to know how to handle your finances in a way so that you do not end up incurring loads of debt or unprepared for your eventual retirement. If you are shouldering lots of debt at this young age, you may not be able to build up a safe future ahead.
Saving Money Tips for Young Adults
There are many milestones to "growing up" and becoming a full-fledged adult. Whether you're a 20-something or in your 30s, managing your finances may seem like an overwhelming task if you don't know how to stay on top of them. So here are a few key areas to look at to get your money in order.
- Practice self control – It is important for you to practice self control from a young age. If you can be discipline in your spending, it is going to help you save money in the long run. Obviously, you should limit or even eliminate spending money on unnecessary items. While it's human nature to want to splurge or treat yourself every now and then, you can use coupons and deals from sites like Groupon (GRPN) or Living Social to help you save money.
- Know where your money goes – You will have to be sure about the things you are spending your money on. If you can keep a track of the things on which you are actually spending your money on, you will be able to have better control over the money flowing out of your pocket. Websites from companies like Bankrate (RANK) and Intuit (INTU) help you monitor your finances. This can help a lot with establishing savings goals and smarter spending.
- Use good budgeting and savings techniques – In order to keep a proper track of your income and your expenditure, it is important for you to budget. So that you can formulate a proper budget, you will be required to make a list of your total income and the expenditures. You can also use a budgeting tool or software for making the process easier. These kinds of software come with the option to provide you alerts if you tend to overextend. While budgeting, you will also remember to include variable expenditure within the list.
- Start investing for retirement – While many young adults are focused on just starting their careers, it's also a good time to start saving for your retirement. After all, it's never too early to begin building that nest egg if you don't plan to work forever. Simple savings is not sufficient. The retirement savings accounts have various benefits and one of them is that these savings are, in general, non-taxable. There are various kinds of retirement accounts like a company sponsored 401(k), Individual Retirement Accounts (IRA), Roth IRAs and so on. You can even manage stock retirement accounts like those offered by brokerages like Charles Schwab (SCHW) or TD Ameritrade (AMTD).
- Maintain your health – In addition to maintaining good financial standing, young adults should also pay attention to maintaining good health. Medical debt is a leading cause of bankruptcy in the U.S., and young people generally take their health for granted. If you're not careful, you could end up incurring huge medical debt that could have been avoided by adopting a healthier lifestyle. Regular checkups could go a long way to help you with avoiding debt.
- Build up your credit score – Building and maintaining good credit is one of the most important steps to financial independence. A good credit score helps you gain access to buy or rent a home, open new lines of credit for loans, or even get a new job. There are many different ways in which you can build credit score and monitor your credit reports, so there's no excuse not to.
So, these are just some tips young adults should follow as they start their journey to adulthood. Financial stability through good savings, investing, and disciplined spending can make life a lot easier.
Stewart Bradley is a contributory writer associated with the Debt Consolidation Care Community and has written several articles for various financial websites. Though he holds his expertise in the Debt industry and has made significant contribution through his various articles, he has interest in budgeting, mortgage, insurance, short term loans, bankruptcy, credit advice and more.