When learning good money management tips, it's never too early to get started. In fact, learning how to save and spend wisely when you're young gives you great insight into how to handle your finances best and will help you build a solid financial future for years to come.
By the time you graduate from high school and are headed to college or looking to begin a new career, you should be prepared to earn money and know how to spend and save it properly. Here are some essential money management tips to help savvy young adults make the most of their income no matter how much they make.
Money Management Tips for Young Adults
1: It’s Never Too Early to Set Financial Goals
When it comes to setting financial goals, the earlier, the better! As soon as you start earning money, you should begin setting long-term and short-term financial goals to keep you motivated and goal-oriented and keep your spending on track. You don't need to make much money to set financial goals.
Teaching money management at a young age will help young savers make smart financial choices now as well as in their future.
2: A Budget is Your Friend
Learning good budgeting techniques when you're young will help you maintain your financial freedom as you build your life, buy a home and car, open an Individual Retirement Account (IRA), etc. Learning to budget is crucial to ensure you know how to save and spend your money to afford everything you need and want, even if it is just budgeting the money you earn from a part-time job.
Budgeting can start as early as teaching your young child how to allocate their allowance and the importance of saving a little money every month.
3: Learn About Savings and Checking Accounts
Before graduating from high school, students should have a checking account and consider opening a savings account. Access to these accounts and knowing how to make a deposit, withdraw money, transfer between accounts, check the status of transactions, or set up alerts when the balance is below a certain amount is crucial. Accessing accounts is easy today with online tools. Online access to accounts is vital if you plan to work or go to school away from home.
Whether your child is entering the workforce or heading off to college, you can set them up for success by teaching them how to use a checking and savings account.
4: Get Comfortable Reading Account Statements
Reviewing your account statements is important to ensure your finances are on track and no transaction errors are present. You can receive a paper statement through the mail or a digital statement (eStatement) that you can view within online banking or on a mobile app. Printed and digital statements contain the same information, including your account balance, loan due dates and payments, account transactions, interest rates, and more. With technology today, banking and keeping track of your account is at your fingertips 24/7. Online Banking is a great way to manage your money.
Teaching your child the importance of monitoring their accounts can help them avoid fraudulent activity and possible fees.
5: Building Credit Now Will Help Frame Your Future
Recent grads should understand the importance of a good credit score and should start early to ensure this by making smart financial choices. Paying your bills on time and creating an excellent payment history will allow you to reap the benefits of an excellent credit score when it comes time to open a credit card, buy a car, or even rent an apartment. The better your credit score, the better the interest rate you could be eligible for and loan opportunities available when needed.
Helping your child learn the importance of building credit will lead them to a better financial future.
6: Save for Emergencies
Learning at an early age to save for unexpected emergencies could pay off in the long run. It's ideal to have three to six months' worth of expenses in your savings account to rely on if unexpected things arise.
Calculating the money they spend each month on expenses and multiplying it by three or six months will help your child determine a target amount for their emergency fund.
7: Don't Be Afraid to Ask for Help
Don't be afraid to ask questions when it comes to advice on financial and money issues. Asking your parents, a trusted friend, or even someone at your local community bank who has experience in paying bills, applying for loans, and building a solid credit history can give you worthwhile money management tips that can help you develop the necessary skills to achieve financial success.
A bright financial future is in store for savvy young adults who take charge of their finances, learn how to save, spend wisely, budget, and understand credit. Thoughtful planning and a better understanding of money management in your child's younger years are among the best things you can do for them because they will help them achieve financial independence and meet their goals now and later in life.
Start having money-related conversations with your child at a young age. Age-appropriate discussions will help build their financial knowledge and set them up for success.
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