If you aren’t studying business or economics at a university, you have probably never taken a class about how to properly manage finances. Until 2020, most states didn’t have any class on personal finance or economics for their public high schools.
If you are like so many young Americans that were never taught how to correctly manage expenses, then keep reading. A lot of young adults make poor financial decisions in their twenties that hurt them decades in the future. Fortunately, you don’t have to make those same mistakes.
Avoid Credit Card Debt
It can be tempting to take on a little bit of debt with your bank if you are short on cash, but it can lead to a bad habit of borrowing money and accumulating debt. If you need to borrow, make sure you are with a bank that has good interest rates for debt. We recommend doing your due diligence and finding a reputable bank that works for you.
A good tip is to never take on debt, even if you know you’re going to get paid the next day. Always make a note of your bank account balance when spending money.
Emergency Fund
One of the most crucial steps you need to complete is creating an emergency fund. It doesn’t matter what expenses you need to pay, what debts you need to repay, keeping an amount of cash in a savings account should be your top priority financially.
A good way to start an emergency fund is to deposit a certain portion of your paycheck each month into a savings account. Try to think of it as an expense rather than money you’re just holding on to. After some time, you will have built up a considerable amount of savings.
Retirement Savings
It may seem like a long time away, but the sooner you start saving for retirement, the sooner you can retire. Money you put into a 401k account will have compounded interest rates.
If the company you work for offers 401k, they may also match how much you put into your 401k up to a certain amount. In addition to this, the money that you put into your 401k is not taxed. If you are able to, take full advantage of a 401k account.
Life Insurance
If you’ve been putting off getting life insurance until you’re older, you should consider how expensive medical bills can be if you are left to cover the cost on your own. To put this in perspective, something as minor as a broken bone could cost thousands of your hard-earned dollars.
It is definitely worth paying a monthly life insurance bill so that you won’t have to lose your entire savings for a minor injury.
Takeaways
Remember to prioritize what your monthly expenses are, and always keep cash in your bank account. You don’t need some fancy business degree to be comfortable financially, just follow the tips we outlined and do proper research before trusting your money in something.
