Five financial tips for young earning adults

Highlights:

• Young earning adults should acquire the right knowledge about savings.
• Protecting one’s savings is crucial to building a fortune for the twilight years.
• Financial knowledge can always be acquired when one is not innately blessed with it.

Young adults, who have just started earning are often a carefree lot, with many of them having a casual attitude about money. Although it is not right to tar everyone with the same brush. Some of them innately have money management skills, in fact, even before earning.

While those with money skills can fairly manage themselves, we will discuss here a few tips that will help others who require some ushering into financial stability.

There are some basic facets that every young earning adult should know and implement in their journey to financial freedom. These are savings, investments, financial safeguards, tax planning, and retirement planning. If any of these is missing, then one’s financial planning is not adequate. Merely saving your money in a bank is not enough.

It is when your savings begin to yield more income you can be assured of a secured future.

So, what should young adults know about money? Let’s explore:

Starting early:

The more time you give your money, the more it will grow. Time is of the essence when it comes to growing your savings, so start early. When started early, even a small amount of regular savings will give more than saving in chunks at a later age. Besides, it will also provide an ease of doing and owning other stuff you love.

Also Read: Are you saving enough? Here’s how to build a retirement fund

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Also Read: Where to park money? Three high-yield savings accounts worth exploring

Transact in cash:

Using plastic money, especially credit cards can be dangerous for your savings. Without realizing you will end up spending more than your budget. Transacting in cash will keep you aware of what is going out and how much is left at hand to carry on for the month. Besides, credit card usage can be bad for your finances owing to their high rate of interest. If Warrant Buffet’s foremost advice for people is to shun credit cards, then it has definitely got some merit in it.

Budget your expense:

A budget is not meant to punish yourself or deprive you of enjoying the good things in life. A budget is to protect your money, to fatten your purse or savings. If you budget your expense after setting aside your savings first, you will always protect your savings by not reaching out to it to spend. The best thing about budgeting and journaling your everyday expenses is that it will jolt you how a regular cup of coffee at a Barista jaunt adds up to a substantial amount over the course of a few months.

Pay yourself first:

It should be the number point in this list. Before paying out your utility bills, you should keep aside the earmarked amount first for your savings, which should never be less than one-tenth of your earnings. You will be amazed how in a span of a few months, it will grow into a handsome amount giving you satisfaction no other thing can provide.

Protect your money:

Merely savings and investing are not enough; you should try to protect your money with adequate insurance. Disability insurance, renters’ insurance, and many others will help protect your wealth. Research for other options that can protect your money so that you can have peace of mind with your money.

Bottom line: 

After counting all the chips and scales, the best advice in personal finance would be to start today rather than lament later. Even if it is too late, you should start saving and try to find avenues to grow your money. You never know; you might just turn lucky.