59% of young adults aged 18 to 24 believe they are highly engaged in their financial future, despite the perception that young people often don’t get how to handle money.
While the percentage is great, all young adults need to understand money and how to handle their financial lives.
A few wrong moves can be costly and impactful for years. Whether this age group is intimidated by financial literacy or just think they have plenty of time to learn, it matters now.
King Cash has some great tips and advice for all young adults who are now making money and need to learn how to manage it. Read on to learn more.
1. Know Where You Spend Money
You would be like many young adults if you took out some cash and went about your days and very quickly thought, wait, why don’t I have any money in my wallet?
Most people who have access to cash just think they can spend it. The truth is that it might surprise you if you really documented and figured out where your money goes.
For example, let’s say you stop daily for snacks and drinks on your way to work. You might not think much about that $10 until you multiply it by 30 days in a month or realize how much you spend in a year.
Knowing where you spend also helps to ensure you don’t spend more than you have.
2. Create a Budget
Some young people don’t believe a budget is necessary at their age. Yet, they take on debt and then don’t have a budget in place.
This is a fundamental skill in understanding your finances. Start by sitting down and writing down all income over the course of the month. Then consider your expenses. Don’t forget to include costs like insurance, gas for your car, and food.
Going back to knowing where you spend money can be helpful when creating your budget. It makes it easier to understand what a necessary expense versus something you want.
The sooner you adopt a savings mentality, the better you’ll be with your finances. Experts always say to pay yourself first. So, when you plan your budget, include setting aside a percentage of every paycheck into a savings account.
When you’re young and don’t make a lot of money, putting money into savings can feel hard and even pointless to some. If you don’t make much, you don’t likely have much to put into savings.
Yet, over time that money in savings adds up. It also trains you to be a saver.
4. Start Early for Retirement
When you’re 20 or 25, retirement feels so far away. Experts will shout from the rooftops over and over that it’s never too early to start saving for retirement.
Again, like other savings, if you get used to it, it becomes part of your budget and long-term financial plan.
If your workplace offers the opportunity to invest in a retirement plan like a 401K, you must do it. The money is taken from your paycheck before taxes, and you’ll hardly miss it.
But this money over many decades can help you have a comfortable retirement when you’re ready.
5. Pay Off Debts
One important financial lesson a young adult needs to learn is the importance of paying off debt. Credit card costs you money in interest. What you end up paying over what you spend would shock you if you carry credit card debt.
It can feel daunting if you’ve already run up some credit card debt. How do you pay it off?
Experts suggest first stop using them. Pay more than the minimum due. Take one card at a time and pay as much as possible until it’s paid off.
Some will use online loans to consolidate debt. Pay all cards off and only make one payment to the online loan.
6. Protect Yourself
As you become more financially savvy, you’ll learn the importance of protecting yourself and your money.
You need to be proactive in doing things so you don’t end up spending more money when an emergency arises.
If you’re a renter, for example, you need to invest in renter’s insurance. If there’s a fire or a flood, you could lose everything, which would cost much more than simple insurance coverage.
The same theory applies to making sure you have disability coverage and health care coverage.
As you take control of your finances, it also makes sense to talk with a trustworthy financial planner to help build wealth for your future.
7. Understand Your Credit Score and Credit Report
Many young people start out making money. Maybe they finance a car or get a credit card. Some will go for fast loans in Canada for a vacation or small purchase.
They don’t have a clear understanding of their credit score or how they handle credit. Pretty soon, they have a credit report that will cost them more money every time they want to borrow.
It won’t matter if it’s a no credit check loan; it will cost more if you don’t have a good credit score.
8. Educate Yourself About Finances
When it comes to anything related to your finances, education is key. Many feel intimidated asking questions related to money when they don’t understand something.
If your money is involved, you should ask questions until you have a clear understanding. Learn financial terms and know how they impact your money.
This could be things like interest rate, loan term, credit score, APR, and more. If you’re getting a loan, you need to make sure you must understand the terms of your loan and what it will cost you.
Follow King Cash for More Financial Tips and Advice
While you could go to kingcash.ca and get a loan, it’s important that you understand your financial responsibilities. Being educated about your financial life is how you spend and save wisely and grow your wealth over time.
At King Cash, we can help you get a loan to get control of your finances. Contact us today to learn more.