Financial Advice For Young Adults

Sound financial advice isn’t just for the benefit of the wealthy or the established or the folks on their way to the so-called ‘golden years’ of retirement. Young adults in the crucial post-high school years can benefit greatly from learning about money management, and how the choices they make can greatly impact their financial life in the short- and long-term.

At the start of adulthood, it becomes crystal clear that money doesn’t grow on trees–but that doesn’t mean you can’t branch out and learn how to accumulate and maximize your earnings, your savings, and your wealth.

Whenever Possible, Pay With Cash Or A Debit Card, Not A Credit Card

It’s a simple premise: If you wait until you’ve saved enough money to purchase whatever it is you need or want, you can put your purchases on a debit card instead of a credit card. A debit card deducts money from your checking account (with no additional fees, we might add), whereas a credit card is actually a high-interest loan.

Using a credit card seems so easy–almost like you’re getting something for nothing. But putting all your purchases on credit cards means you’ll be paying interest on that box of cereal or those sneakers for years to come. Better to buy it and be done.

Credit cards are best relied on for emergencies only. And keep in mind that you’ll need to pay your balance in full every month in order to avoid interest charges, which can add up significantly over time.

Establish An Emergency Fund

Regardless of how much money you owe in credit card debt or student loans, it’s always possible to put at least some of your money–it doesn’t have to be a large sum–into an emergency fund every month. Consider putting your emergency fund in a high-yield savings account, a money market account, or a short-term certificate of deposit (CD) in order to earn the most interest. Over time, you’ll have more than an emergency fund saved up; you’ll also have funds set aside for vacation, lifestyle purchases, and perhaps even a down payment on a home.

Begin To Budget

There are two golden rules when it comes to financial advice: Never let your expenses exceed your income, and always keep track of where your money goes. Budgeting allows you to address both.

When you start tracking how you spend your money day to day, month to month, you begin to realize how even minor costs add up over time. Making small changes, such as brewing your morning coffee at home instead of hitting the local coffee shop every day, can have a noticeable impact on your finances.

Reining in larger monthly expenses such as rent can save you even more money. Instead of choosing an apartment that offers all the bells and whistles, consider a simpler and less expensive place. The money you save on rent might put you in a position to own a house or a condominium sooner than you expected.

Educate Yourself And Avoid Bad Advice

It’s never a good idea to rely on random financial advice from unqualified people. You can take charge of your financial future by doing some basic research that can yield important information about personal financial decisions. Articles that address money matters abound online and in books; it’s simply a matter of putting in the time to find legitimate resources and apply what you’ve learned.

It’s your money–you’ve earned it. Now it’s time to protect it. Here’s how you can help ensure that your savings are maximized and your losses, minimized.

• Disability Insurance

Disability insurance protects what is undeniably your greatest financial asset: the ability to earn an income. This type of insurance can provide you with a steady income source should you ever find yourself unable to work for an extended period of time due to injury or illness.

• Renter’s Insurance

To protect the contents of your home from loss due to fire or burglary, consider taking out renters insurance. Be sure to read the policy carefully so that you have a clear understanding of what the insurance covers.

• Meet With A Financial Planner

A fee-only financial planner can provide unbiased advice about your money matters. Unlike a commission-based financial advisor, who earns money when you sign up with investments promoted by their company, a fee-only planner is more likely to provide you with financial advice that’s in your best interest.