Financial management is something that everyone needs to come to grips with if they want autonomy over their lives. With topics like inflation and looming recessions dominating news headlines, it’s more important than ever that you learn how to take control of your finance’s double top pattern.
This is particularly important if you’re a young adult trying to get your education, build your career, and raise a family. We’ve got you covered if you’d like to take control of your finances but don’t quite know where to start.
Keep these financial tips in mind to guide you through your young adult life.
1. Learn How to Create a Budget
First and foremost, you have to learn to budget if you want to build and manage your wealth. Many people, young and old, make the mistake of spending money without giving much thought to what goes in and comes out of their bank accounts.
Creating and sticking to a personal budget will help you keep track of every dime that comes into your bank account. Here are some budgeting tips to consider:
- Use an app that is linked to the bank accounts that you use, so that you get alerts and real-time data
- Make room for all of the important things in your life, and leave space for treats and discretionary spending
- Set aside at least one day a week to set and check your budget
- Adjust your budget each month and whenever you go through life changes
- Resist the temptation to overspend your budget so that you build financial discipline
This is one of the most critical principles for taking care of your money, whether you’re an individual, have a family to take care of, or run a business.
2. Build an Emergency Account and Savings Plan
Simply put, you can’t master your finances if you can’t save money. Today, 51% of people in the United States don’t have three months of savings set aside in the bank.
This is a boat that you don’t want to be in since the simplest financial setback can wreck your life. An emergency fund should have 3 to 6 months minimum of your gross income. Having this financial cushion keeps you liquid and makes it so that you can take care of any emergency that comes your way.
You’ll definitely want to be more liquid as inflation sets in since individuals and companies begin tightening their purse strings. Once you have your emergency savings account together, create a savings plan so that you’re transferring consistent sums of money into a high-yield savings account, certificate of deposit (CD) or other accounts.
Automate your savings as much as possible so that you always have a financial cushion without even having to think about it.
3. Bank With the Ideal Financial Institutions
Think of your bank accounts as the vehicles that you use to move money around. You’re better able to manage finances when you do business with banks and credit unions that you trust.
Read through the prospectus and terms before signing up with an account so that you know how much you can expect to pay in fees. They should be user-friendly and allow you to do plenty of business online, while also having helpful branches and customer support. Check out the different banking products they have and choose what works best for your financial situation.
4. Look Into Investments That Build Wealth
Once you have your savings and budget together, it’s time to start looking for growth opportunities. Investments are how you build wealth for yourself and for future generations.
The stock market is one of the ideal places people turn to grow their wealth. Find quality stocks in a variety of sectors, such as healthcare, tech, and retail. Learn about which exchange-traded funds (ETFs) are the hottest on the market today, and look into diversifying the industries that you choose to invest in.
Plenty of people have also built wealth by investing in real estate. You can do this by buying homes to rent out, flipping properties, and investing in real estate investment trusts (REITs).
Younger generations are also looking for unique opportunities, such as crypto and peer-to-peer (P2P) lending. The sky is the limit, so stay informed on these sorts of investments as you build your wealth portfolio.
5. Take Control of Your Taxes
No matter how much money you make, you have to learn how to correctly pay taxes. Make sure that you file each year by the April deadline, understand your filing classification, and do your best to avoid penalties and fees.
Learn about paying estimated taxes, and determine whether you’d like to handle your taxes on your own or hire a certified public accountant (CPA). Find out the best types of write-offs and deductions so that you can also lower your tax bill.
6. Learn All About Credit
Young adults also have a responsibility to learn credit and get their scores in order. The higher the score, the easier it will be for you to get quality credit cards, get approved for mortgages, and find the apartment of your dreams.
Credit counseling is helpful, and will teach you what details make your score take a hit, and which give you a boost.
7. Regularly Set Financial Goals
Finally, never be satisfied when it comes to your finances. Keep setting and achieving new goals so that you can watch your wealth and quality of life grow.
Become a lifelong learner as you set these goals. You can learn a lot by subscribing to blogs and financial publications, like Classical Finance, Forbes, and Yahoo! Finance. These goals will change as you grow older and find yourself earning more and going through life changes.
The Best Financial Tips for Young Adults
You’ll thrive with your money and wealth-building journey when you can apply the financial tips in this article. Having the right information is half the battle, so use these seven tips as the ultimate starting point as you also get help from financial professionals.
Start with these suggestions and check out our other articles when you need help with money, business, wellness, and several other topics.