Young adults have a great opportunity in getting started with their personal finances but also face challenges
As a young adult, it’s important to start off on the right foot when it comes to personal finance. If your family set a less than ideal example of money management, it’s time to start learning everything you can about good financial habits to secure a bright future.
Tackle Debt Early
Many college students find that it’s nearly impossible to land a degree without racking up a substantial amount of debt. College is expensive, and most families are unable to fund tuition and living expenses for their children. If you were not able to make it out of college unscathed from debt, it’s important to recognize that you’re not alone. Millions of young Americans are in the same boat, but not everyone will handle debt correctly. If possible, start making small payments while you’re still in school and don’t wait until the grace period has passed.
Learn to Cook
Young adults often struggle with money due to one big expense: eating out. During your college years and beyond, you might find yourself going out with friends several times per week. Even if you have a well-paying job, eating out with friends can make a substantial dent in your income. To quickly rein in finances and boost your savings account, learn how to cook and make every effort to eat at home most of the time. Cooking tutorial videos are easy to find on YouTube, so you’ll be able to see how recipes are made and replay as needed.
Start Investing Early
When you think of investing, you might think that it’s only for well-established people in their forties and above. However, investing can be a wise choice for people at any age. By beginning to invest in a 401(k) as early as possible, you’ll see much greater payoffs in the long run and you might even be able to enjoy an early retirement thanks to your foresight.
Find Deals on Insurance
Paying for car insurance while you’re young can make a serious impact on your monthly budget. If you believe that you’re paying too much for insurance, start looking around for other options. Once you’ve started saving on several insurance policies, you’ll be able to put the extra money towards saving, paying off debt, or investing.
Control Credit Card Spending
Signing up for a credit card with a high rate of rewards, like six percent back on groceries, can be a great way to improve your credit score and save money on essentials. However, many of these reward cards also come with a high APR. To stay out of debt and boost your credit score, make sure to only use the card for affordable monthly expenses like gasoline and groceries. While it’s often tempting to use the card to gain cash back on other purchases, it’s best to stick to necessary purchases that you can pay off in full each month.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.