Transitioning into adulthood is something everyone looks forward to. The freedom to do and choose as you please is delectable. But what this sugar-coated version fails to highlight are all the serious responsibilities that pile on. You have to earn a living, pay bills, file tax returns, manage your household, cultivate social relationships and so on.
While schools leave no stone unturned to ensure that students know that mitochondria are the powerhouses of the cell, they fail to provide any lessons on financial management. Unless you studied finance in college or know an expert who can guide you, you are essentially shooting in the dark.
Instead of suffering from the perpetual brokeness of being a young adult, check out our tips to manage and build your finances when you’re starting out.
Understand your financial standing
Do you have no idea where your income goes? That’s the first financial mistake you’re making. Before finding and implementing ways to manage your finances, you must know where and how much you’re spending.
There are several apps available that make tracking expenses easy.
Make a budget
When it comes to effective financial management, you need to consider the long-term picture. You can’t go taking it day by day and hope it all works out on its own.
Make a realistic budget and strictly follow it. This is an old but still relevant method to regulate your finances.
Cut-down expenses
Living on your own makes you incharge of creating the lifestyle you want to lead. While you should try living your best life, that doesn’t mean living beyond your means. Cut-down all unnecessary expenses.
Start saving
It’s not easy to save when you’re on a tight income. But you must start saving, no matter how small the amount is. It’s good to have a safety net if you face a financial crisis.
Avoid impulse decisions
It’s incredible that you can earn money and choose how to spend it. But if there’s no one overlooking your expenses, you have to be your own voice of reason.
Do you really need to buy a new pair of shoes? Is it necessary to upgrade to Airpods? Before making an expensive purchase, ask yourself if it will add value to your lifestyle.
In addition to this, eliminate things that tempt you to spend. Delete shopping apps and unsubscribe from mailing lists.
Work on your credit score
You should work on building and improving your credit score. A good credit score will establish your creditworthiness and eligibility for borrowing in the future.
So do your best to be on top of repaying debt and bills. If you’re struggling with your monthly paymentcloud, there’s no harm in seeking assistance. You can borrow from your family or take out a short-term loan from Mulah.
Learn to say no
Is your happening social life keeping you from shaping a secure financial future? You must learn how to say no. There will be countless parties to attend in the future, and you don’t need to jeopardise your finances for the sake of being social.
Stop using credit cards
Credit cards are trouble dressed up as a helping hand. They essentially allow you to spend money you technically don’t have.
This makes it very easy to make financial slip-ups. Instead of credit cards, switch to e-wallets, cash and debit cards.
PaymentCloud gives a great explanation on why paying with cash eliminates the chances of fraud and high banking fees.
Start investing
Your money isn’t doing much sitting in a bank account. You can create an additional source of income by investing your savings. Don’t get us wrong, but investments are risky. But if done correctly, they can be quite profitable.
Learn & earn more
If you want to do well financially, you must constantly evolve and improve your skillset. Adding to your resume will open up your earning potential.
While there is no set path to a secure financial future, you can improve your odds by taking an active interest in your finances.
