While the topic of personal finance has not yet become a required subject at any level of schooling, it is easy to believe that young adults might be fairly uneducated about how to manage their money when they find themselves out in the real world for the first time.
The follow is a great starting point of 8 tips about managing money that will get you on the road to a comfortable and prosperous life.
Delay Instant Gratification
For the fortunate but select few of you, your parents taught you this skill when you were a kid. Credit may feel effortless and easy enough to make that purchase the minute you want it, but it is still always better to wait until you’ve actually saved up the money. Do you really want to pay interest on a pair of jeans or a jug of milk?
If you make a habit of putting all your purchases on credit cards regardless, even if you always intend to pay it in full every month, you will likely still wind up paying for those items in 10 years, or consolidating the debt to save high interest. If you want to keep your credit cards for the rewards they offer, make sure to always pay your balance in full when the bill arrives.
Be the Master of Your Financial Destiny
If you don’t learn to manage your own money, other people will find ways to (mis)manage it for you. Don’t just rely on others for advice; take charge and read a few basic books on personal finance. Arm yourself with personal finance knowledge, and don’t let anyone catch you off guard. You need to understand how money works to take the first step toward making your money work for you.
Budget & Track, Track & Budget
There is no better way to understand your finances than to create a personal budget, track expense and income and making sure that the first is not exceeding the latter. You will quickly see how your morning coffee is having a huge impact on your financial situation; a simple change can go a long way! Understand your fixed monthly costs and keep them under control.
No matter what you owe in fixed costs, loans, etc every month, you always need to ensure that you have saved for emergencies. Having an emergency fund set aside in savings will let you sleep easy at night, and before you know it, you will be so adjusted to setting aside a fixed monthly amount that you will not only have an emergency fun, you will also have money for a vacation, down payment and more!
Retirement is in Your Future!
As the saying goes, “time flies”, and the sooner you start saving, the less principal you’ll have to invest to end up with the amount you need to retire! When you are accepting a an employment position, ask if your company will match part of your contribution: it’s free money!
Taxes are a Sure Thing
It’s important to understand how income tax works and that it is an unavoidable part of your paycheque. When considering your salary, you need to know how to calculate whether that salary will give you enough income after taxes to meet your financial goals and obligations.
Guard Your Health
If meeting monthly health insurance premiums seems impossible, what will you do if you have to go to the emergency room, where a single visit for a minor injury like a broken bone can cost thousands of dollars? If you’re uninsured, don’t wait another day to apply for health insurance; it’s easier than you think to wind up in a car accident or trip down the stairs.
You can save money by getting quotes from different insurance providers to find the lowest rates. Also, by taking daily steps now to keep yourself healthy, like eating fruits and vegetables, maintaining a healthy weight, exercising, not smoking, not consuming alcohol in excess, and even driving defensively, you’ll thank yourself down the road when you aren’t paying exorbitant medical bills.
Planning and Insuring
Investing in insurance can protect you should the unexpected happen. Renter’s insurance will protect the contents of your place from events like burglary or fire. Disability insurance, whether from a private party or through your workplace, protects your ability to earn an income in the event of injury or illness and provides you with steady income if you are unable to perform your job for an extended period of time.
Speak to a financial advisor who can direct you on how to protect your money from taxes, which is easy to do with RRSP’s,as well as which high interest investments are the wisest choices.
The Bottom Line
There is no need to struggle for a lifetime trying to learn how to manage your financial situation. You have got this, and if you follow these tips, you have got a successful future with good times and financial security ahead of you!