Arguably one of the most important skills a young person needs for their future is financial know-how. Finances and money management will affect most of a person’s life, and yet it isn’t in the curriculum or really taught in schools.
Unfortunately, many young adults get themselves into avoidable debt simply because they do not know any better.
Read on for finance tips to help you achieve financial security.
All Finance Tips You Should Follow When You Are Young
Planning
You need to take an active part in the creation of your future.
Very few good things happen by accident. Some young people are under the impression that the future will provide them with the things that they want, but you have to work for it.
So try writing down your goals and aspirations and work towards them.
Planning can take other forms, and there are things you can do to prepare for the future.
Things like insurance can be a worthy practice.
However, some are contingent on where you are in life, such as house or car insurance – you can’t take those policies out if you haven’t got either!
Although there is something that you can take out from a younger age to help protect your financial health in the future.
Income protection insurance like the one provided by Drewberry can be a solid investment.
It pays you a portion of your monthly income if you can’t work. This can be because of an accident or illness, or unemployment.
Budgeting & Saving
Some young people view budgeting as dull; when they start to make decent money for the first time, the initial impulse is to spend it all.
Although, once the novelty wears off and it does eventually, it becomes clear that budgeting is the best way to keep track of spending.
As you get older, you will see that a budget makes it clear where your money is going.
When creating a budget, you should start with the essentials, food, housings, bills, then account for the luxuries.
Your budget should not take up all of your money and leave you with nothing.
The key is to live below your means and spend less than you are earning.
In your budget, you should also account for your savings.
Things will happen, such as the nature of life, and so you should try to prepare for every eventuality without the need to beg or borrow.
A mistake that a lot of young people make is to wait until they earn ‘enough’ to save. You will soon realise there isn’t really an ‘enough’.
Whatever you earn, try to save something, even if it isn’t much to start with.
As your earnings increase, try to save more.
It can be surprising how quickly a savings pot can add up. Include whatever amount you are saving in your budget; if your earnings are regular, you can even set up a direct debit to automatically transfer an amount into your savings.
Debts
Any form of a loan or financial assistance should be approached with extreme caution.
Sometimes debts are necessary, but you should try to only borrow for things that have lasting value, such as property and education.
You should never go into debt for clothes, gadgets or your lifestyle as trends are constantly changing, and you will incur a mountain of debt trying to keep up.
If you do need to take out any loans, you should shop around and take into account interest rates; some rates are scandalously high and can make paying them off cost far more and take a lot longer.
Building a good credit history is essential, and it takes time, so starting earlier is advised.
Paying debts is an excellent way to build your credit score, which you will need to borrow more significant amounts in the future.
Some people recommend getting a credit card to pay for smaller expenses before paying it off monthly as another way to build your credit score.
However, the temptation with credit cards can be intense; it can be what spirals people into debt sometimes, so make sure you are meticulous with repayments if you get one.
Invest in Yourself
Everyone has talents and unique abilities, identify yours and maximise them.
Often greatness can come from the development of a natural gift or the pursuit of a dream. If you choose to follow your passions, you can achieve truly extraordinary things – but practicality is important.
You will always be your own biggest asset, so invest in yourself.
Personal development can take time, effort and ambition. It takes daily action, read, listen or watch something of value everyday.
Youth unemployment is a global issue, and many young people struggle to secure full-time jobs. Even university degrees don’t afford you many advantages in an overwhelmingly competitive market.
Start early; when you come of employment age, try to get yourself work experience and internships.
Even casual weekend employment will show that you are dedicated and someone to be taken seriously.
By developing your skills by the following finance tips even after your formal education is finished, you are making an effort to continue to make yourself one of the best candidates. If you work hard, you can determine your own value and prove it to employers. Follow the finance tips and you will see the results.
Invest in yourself and go beyond simply furthering your marketable traits. Don’t allow a sense of complacency or fatigue to build up. Protect your physical and mental health.
When you suffer from afflictions, your finances can suffer too. Some mental health sufferers reported impulsive spending as a side effect. Even more so than that, some people struggle to retain employment when they suffer from a mental or physical ailment.
Therefore, it is imperative that you give your body the rest it deserves, try to stick to a good diet, and do not take your mental health for granted.
If you ever feel overwhelmed or begin to struggle, speak up and seek health.
Relationships
People are a product of their surroundings.
Try to choose good people with a decent moral compass to surround yourself with. The people in your life should add value as you should to theirs.
Their influence can have long-lasting effects for you. If you are surrounded by people who pursue instant gratification and live beyond their means to achieve, you will likely adopt this lifestyle as well, probably to your detriment.
These people should be supporting you in your endeavours and helping to guide you onto the right path.
The impact of your choices often has far-reaching consequences and can directly affect whether or not you reach your full potential.
It is therefore vital that you make good choices lest you be stuck with them.
Though it may seem unfair, the choices made in youth often set the foundation for the rest of your life.
For some people, financial security is a given if they come from a family that is better off.
However, some people will have to work for it. It depends on the emphasis you place on financial stability and whether or not it is personally important to you and your future goals.
If you implement the above advice, you should find yourself well on your way to a brighter financial future.
Photo: Shutterstock
Learn more finance tips and read How to Save Money on a Smartphone If You’re Between Jobs.
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