Many people who graduated years ago, probably wish they could go back and do a few things over. Most financial challenges can be avoided by doing things carefully. Adopting healthy finance habits can make your future a lot easier and more enjoyable. On the other hand, unhealthy financial habits can create challenges that take years of work to recover fully. So, get your adulthood started on a positive financial path from the beginning.
1Learn About Personal Finance
Good personal finance habits aren't complicated, but they're essential. They're also most effective when started early. Get a good book on this topic and read all about it. Then actually, follow the advice.
2Budget, Save And Invest
Consider your salary and then put together a budget that makes sense for your income and expenses. Remember to set aside some money, for savings and investing each month. Do not forget to create an emergency fund. Start with the goal of setting aside three months of living expenses. If you should ever require it, you'll be prepared and grateful to have it.
The greatest financial leverage young adults have is time. Even small investments can grow into incredible sums given enough time. Educate yourself about stocks and bonds and get started today.
3Do Your Best To Avoid Debt
Your debt is a barrier to thoroughly enjoying your future; it is a dream killer because it takes years to resolve. Avoid saddling yourself with debt. A possible exception is taking out a loan to buy a home.
Poor spending habits can cause challenging situations quickly. Few things feel better than being debt-free, so set up a plan to get out of debt. You'll be glad you did!
4Spend Money On Worthwhile Experiences
You can't just save like a miser. Life is short, so get out and enjoy it. It's okay to spend some money on enjoyable experiences without being afraid. It is a big part of the reason you earn money in the first place.
5Get Medical Health Coverage
No country has higher medical costs than the U.S. Because of this, many bankruptcies are due to medical expenses. Illnesses and accidents happen, so be prepared. Everyone requires health insurance to mitigate this substantial risk.
6Check Tax-Deferred Retirement Options
It's hard to find a better deal than a 401(k) available through your employer. Between the matching, tax deductions and tax-deferred growth, you won't find a better investing deal around. Remember to investigate the different IRA offerings, too.
7Leave Your 401(k) Alone
Many young adults come up with a reason to dip into their retirement accounts, under the guise of having enough time to make up for it later. It is a huge mistake. You're better off doing without than having to raid your retirement funds.
Avoid the many pitfalls of developing poor personal finance habits. Mistakes made at this point in your life are recoverable, but the entire experience can still be extremely challenging. Good habits ensure good outcomes.
Your financial future can be great if you're willing to put a smart plan into action right now. There's no reason to repeat the mistakes of others. Implement these tips, and you'll find your financial life will have a minimal amount of drama and challenges. Avoiding mistakes is a significant part of being successful!
Jackie Wing is an Alaska native, who enjoys snowboarding more than is probably socially acceptable. She lives in Anchorage with her two dogs Reese and Peanut, or as she likes to call them "Thing 1" and "Thing 2."