Unfortunately financial literacy is not a mandatory class in all high schools across the country. Therefore, many teens and young adults are not equipped with money management skills to help them prosper throughout their lives. Frugal Fairfield invites you to read on to learn some helpful tips that can get young people on the path to financial success.
Start an emergency fund
When you start working, you need to start saving. It's essential to save for a rainy day, but many Americans are completely unprepared for emergencies. According to a Bankrate survey, 28 percent of adults in the U.S. have no emergency savings, and 25 percent have an emergency fund but not enough money to cover three months' worth of expenses. If you haven't begun to save for a rainy day, now is a great time to start. Most financial experts recommend saving for at least six months' worth of living expenses for emergencies. This way, you'll have money to cover unexpected car repairs, medical bills, and other emergencies.
The easiest way to start saving is to set up automatic contributions to your savings account to be transferred from your checking account each month. Consider your contributions like any other bill and include them on your budget.
Know where your money is going
Speaking of budgets, everyone should create a written budget and stick to it. Use a simple budget worksheet or a free program like Mint to manage your finances. If you find that you are falling behind every month, having a budget in place and tracking your expenditures can help you identify where you are overspending and figure out places you can cut back.
Go Back to School
If you’re stuck in a career that doesn’t allow you to earn as much as you’d like, or you’ve always wanted to get a higher degree to help you grow in your career, then consider going back to school. Fortunately, taking classes has never been easier thanks to online universities. For example, if you’ve had your eye on a business degree but you never had the time to attend classes in person, an online program can help you achieve those dreams on your own schedule. Not only will getting a degree help your career, it will also provide you with a sense of satisfaction and pride.
Don't spend too much on a car
When you are purchasing a vehicle, the car payment itself isn't the only thing you should worry about. Many other costs associated with driving need to be accounted for in your budget, including the costs of gas, maintenance, repairs, and insurance. When it comes to insurance, your geographical location has a significant impact on your premium. Also, drivers under 30 typically pay more for auto insurance because they are considered a higher risk. Safety features such as airbags and automatic seat belts, as well as anti-theft devices can also affect your costs. Money Crashers offers a comprehensive list of demographics, car-related factors, and personal driving habits that can impact your insurance rates.
Be smart about debt
All those credit card offers in the mail are certainly tempting to young adults, but you need to be smart about taking on debt. Apply for only one credit card and use it responsibly. Don't rack up charges that you can't afford to pay off at the end of the month.
If you have taken on a lot of debt already and have multiple creditors, you need to start paying off your highest interest debt first. The sooner you pay off those high-interest cards or loans, the less interest you'll pay in the long run.
Check your credit report annually to make sure there are no errors. In a 10-year study by the Federal Trade Commission, they found 20 percent of credit reports contained errors. You're entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies – Experian, TransUnion, and Equifax.
Learn how to live on less
If you really want to start saving for your future, you need to earn more money and learn to live on less. Get a second job or take steps to improve your marketability in order to get a salary increase. Be willing to drive an older vehicle, live with roommates, or purchase clothes at thrift shops. Use coupons, search for sales, and don't get caught up in buying the latest and greatest of everything.
When you are young, time is on your side. The earlier you start saving, the longer your money will have to earn interest and grow. By saving as much as you can and avoiding debt, you can assure yourself of a prosperous future.
Photo via Pixabay article by Sheila Olson of fitsheila.com