Dealing With Your Finances As A Millennial
When first leaving your parents home or leaving college, there are many things that are going to be on your mind, and one of the most important things you need to learn is how to be responsible with your personal finances. It’s definitely quite the challenge, but it can be done. These decisions will only become more difficult once you get married or have kids. So the sooner you can begin to plan for life instead of having life plan you the better. Consider the following helpful advice for dealing with your personal finances as a young adult.
The first thing you need to do is develop a personal budget. Consider all of your expenses, and think about your income. Before you ever develop your budget, think about whether or not you can increase your income. After this step, start to lay out your budget. You want to find ways to cut corners, and you want to make sure you don’t leave anything out. This is to be an all-inclusive plan.
If you want to find a way to add some extra money to your budget each month, I recommend starting a blog. Read my post here about How To Start a Blog and Make Money Online.
As a young adult, it’s important to make sure that your bank accounts are well funded by your financial situation. Perhaps you already have a bank account that you started as a child and need to see if it fits your current needs. Most banks offer student checking accounts if you’re a college student, as well as other free checking options for non-students. Additionally, there are high-interest savings accounts available, especially if you bank online. These high-interest rate accounts are harder to find these days, but as interest rates continue to rise over the next few years these will start to come back again.
You have to determine if you’re ready for a credit card. Having a credit card and treating it responsibly is mandatory if you want to build your credit in the right direction. Ideally, you should pay them off at the end of each month before the grace period ends. If you do hold a balance on your credit cards, make sure you don’t spend more than 40 percent of your credit limit. You should do everything within your power not to hold a balance on your cards. The high-interest rates on credit cards negatively impact your ability to be financially free. I am sure you have heard of the power of compounding interest and the power it has. Well, Credit Cards are considered negative or reverse compounding and is giving all the financial compounding benefits to the banks and credit card companies and not you. Credit Cards are a two-way sword, however. You will want to have good credit so you can secure the best rates for your first home. Be careful you are playing with fire when you are charging things you can’t afford to a credit card.
You must absolutely set a precedent of paying your bills on time, all the time. If you don’t, you’re going to find yourself in a mess. You will have bills hitting collection agencies, complicating your life and dramatically increasing your payments and interest. You want to be in control of your bills, and this has to do with sticking with your budget consistently.
Always make sure you are on top of your tax situation. You need to make sure you’re saving your receipts and planning to do everything you can when getting your taxes. Being prepared for your taxes at the end of the year can really give you a big push in the right direction. Not preparing for them can leave you hurting.
There are going to be many things you encounter that will tempt you to do the wrong thing. You have to be strong and in command. Make sure you don’t waiver and that you show your responsibility for taking control of your finances.
It is a crucial time when you’re first setting out as a young adult. If you start off in the right direction, then much of what you do afterward should come naturally. However, starting out on the wrong foot will find you in financial misery. Do the right thing, and make the right choices!
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