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Last Updated on February 19, 2024
Coming to grips with personal finances can be a little daunting, even for adults who have years of experience in the working world. From budgeting and taxes to maintaining a high credit score and growing a savings account, there’s a lot to take in. If you’re trying to navigate your own personal finances and you’re having little success, the following are some tips that every young adult should live by.
Address Debt
Ignoring debt may seem beneficial in the short-term but doing so will cause you much bigger problems in the long-run. Take a good look at your accounts and make a plan detailing how you’re going to make the repayments that you need to make. If you have a big student loan balance, you could collect on everything you buy with a credit card that offers cashback. If you have a mortgage and you’re struggling to make the minimum repayment, why not look for ways to increase your monthly income so you can make those repayments? There are always options when it comes to addressing debt so don’t let the stress get too much for you.
Set Goals
Like everything in life, you need to know your financial destination and have a path outlined on how you’re going to get there. What we mean here is you need to have clear financial goals as everyone wants different things at different stages of their lives. Do you dream of building your dream home in the next few years?
Perhaps your number one goal is to pay off your student debt so you can be free of those monthly repayments so you’ve considered refinancing student loans? Or maybe you have a baby on the way and you want to save money to create a financial cushion should your family need access to cash fast? Once you have determined what you want, apply the S.M.A.R.T. mantra to each goal you have. This means each goal must be specific, measurable, actionable, realistic and time-bound.
Protect Yourself
Anything can happen in life so it’s best to be prepared for the unexpected. Regardless of your age, it’s always a good idea to take out a life insurance policy so your loved ones are taken care of financially should you pass away. The younger and healthier you are, the cheaper the premiums will be so leaving this one on the backburner could end up costing you a considerable amount of money.
Learn How to Budget
If you don’t know how to budget, it’s time to learn, as this will be your secret to knowing where you stand financially. With effective budgeting, you’ll pay off debt quicker, your spending will be under control and you’ll grow your savings too. Budgeting will be as difficult as you make it but you should always follow the basic principles of establishing your income, adding up all your expenses and subtracting the expenses from your income. You can do this the old-fashioned way with a pen and paper or you can download a budgeting app that will help keep you on track.
