Financial Tips for Young Adults
We all are only young once and we have to live your life to the fullest. That also means we have more energy when we are young and that is the best moment to start preparing and planning for a better future (financially) in a long run. Want to know more about it? Go on and read my “Financial Tips for Young Adults”.
Financial Tips for Young Adults
At the time of writing, I will be 33-year-old in eight days. I find youth seems to fly by so quickly and time does not wait. I think I am still considered a young adult today. Just like each one of us here, there is no reason why I should not have a financial plan. I have started planning mine seven to eight years ago while I was still in the University pursuing my master. Here are some useful financial tips for the young adults and to take charge of your financial health.
1. Start saving and manage your debt
As a young professional having entered the workforce at the beginning, the take-home pay may be nothing much. In Asia, most of the young adults stay with their parents and most expenses may be insignificant as food, lodging and utility bills will be covered by the parents. One might think the saving should only be made after spending on entertainment or luxury items (spending should be made after saving, read my previous post on Cut Expenses Save Money)
One day you will be living independently and taking care of all the necessities from your take-home paycheck. So one should be careful right from the first paycheck and set aside money for necessities. By doing that, even your parents are supporting you financially, that set-aside money can be banked into a saving accounts. I personally suggest young adults not to overspend on a last gadget as that is the main problem in the society today that people overspend on new tech gadgets just to make themselves look better. So, DO NOT SPEND ON THINGS THAT MAKE YOU LOOK COOL BUT MAKE YOU POOR at the end of the day.
There is a post I like very much on “People Who Spend Money On Experiences Instead Of Things Are Much Happier“, where the article talks about “life is about memories and not diamonds”. The post does not talk about financial planning but it encourages people not to spend much on gadgets and things.
Minimize the usage of credit card, interest charged on the outstanding balance can accumulate so fast that will leave you with huge debt. Some banks are smart enough that they trace your outstanding balance of your credit card, and make some personal loan offer to just settle the debt. Do not simply fall into the trap as you are basically adding up your depth just like rolling a snowball – become bigger and bigger. So, budget carefully and save what you can and do not spend on credit.
2. Set up an event fund
3. Keep working and study
Traditionally, the previous generations believe that their children’s chances in life will be greatly enhanced by obtaining higher educational qualifications. This belief does not work anymore in recent years as there are more and more professionals with degrees, masters and Ph.D. as anyone can get pretty much any qualification they want, just on the Internet. That means we are living in a world with significant competition and to stand out, one has to be realized that qualifications are now a dime a dozen. MONEY management is the real deciding factor of quality of life, not education. From my point of view, people should be suggested not to “take a break” from your job in order to study, we should be studying part-time while working. I know it is difficult, but that is how we could stand out from the crowd.
4. Invest and take health insurance as early as possible
I am not entirely sure how the health insurance works in other countries, but in most of the countries in Asia. You are basically on your own when it comes to health and medical expenses. Life is unpredictable. When we are young, we feel invincible. When one reaches 30, sometimes early onset health complications and lifestyles diseases can already start to set in. We are not living in a world full of pollution, the air we breathe in, the food we take and the things we use every day. Anything can happen, anytime, anywhere. So young adults should take up health insurance as early as possible because the premium will be low and manageable. You can lock in an insurance package loaded with benefits at a younger age.
1. Set aside time to review your finances and learn about money management. There is no such thing as “Wealth” or “Financial” planner that will take care of your money. You are the owner of the income you generate and you should be the one taking charge of that!
2. Take the responsibility of your financial well-being at an early age. Review your financial goals and develop strategies to increase revenue and maximize returns on your financial portfolio.
3. Learn how to make basic accounting and develop a habit of controlling and managing your cash flow from very young age.
Money management requires time to learn and it is best to learn as young as possible.
Thanks and hope you enjoy my post on “Financial Tips for Young Adults”