Five Financial Tips To Help Young Adults Avoid Having Money Problems

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Realizing you’re now an adult is almost always followed by the dreadful realization that you’re not ready for being one. If you’re a fresh college graduate with a student loan that’ll take a third of your life to pay off, you won’t be blamed for feeling like you’ve been treated unfairly.

Acknowledging the responsibility that being an adult confers on you can be difficult, especially financially. For the most part, you will have to be responsible for your housing, feeding, clothing, and even buying yourself treats.

Learning the basics of personal finance management is essential for navigating your early days if you don’t want to end up drowning in debt. Here are a couple of tips every young person will find useful:

• Learn About Taxes: Taxes are an essential part of financial management because they are unavoidable. Once you earn income, you have to pay your personal income tax to stay on the right side of the law. Learning how to evaluate your personal tax will inform your spending choices and other money decisions like savings, insurance, and investments. Since taxes differ from state to state, knowing how to calculate it can also help you evaluate job offers from different locations and know which is better.

• Diversify Your Income: For most young adults, the primary source of income is a job. If you’re in a high-income field, it may be enough to take care of your immediate expenses. If you’re not, you have to be a bit more ingenious. However, regardless of where you find yourself, diversifying your income sources is a recommended way of increasing your earnings. Investing in passive income generating ventures like real estate, stock exchange market, etc. are popular ways of diversifying one’s income.

• Always Save on Purchases: As a young adult, the pressure to appear successful is a slippery slope to avoid. Unless you’re in an industry where social currency is important, you should avoid showing off. When making purchases, always look to cut deals, like with cashback from https://www.rebatesme.com/. You can plan your shopping for sale. You should also look to make second-hand purchases on more expensive items.

• Choose Making Payments in Installments Over Upfront: When making substantial purchases, e.g., a home, car, etc., avoid paying upfront even if you have the cash to. The reason behind this is simple - if you spend a considerable chunk of your cash reserves making a purchase, you won’t have much to use if you have an emergency. Structuring your payments for a more extended period helps you enjoy more financial flexibility.

• Create an Emergency Fund: Saving for rainy days is an integral part of finance management. It is a way of paying yourself and making sure that you don’t end up financially stranded. The great part is that if rainy days never come, you can always use the funds for something else.
Personal finance management is an essential skill for every young adult to have. Although there’s a lot more to be learned, the lessons of this article are an excellent starting point.