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8 Money Tips for Young Adults

Personal finance still isn’t required in high school or college and, as a result, many young adults don’t have a good foundational knowledge of how to manage their personal finances. Fortunately, it isn’t complicated. A willingness to learn and do a little reading is all that’s required.

With a small investment of time and energy, anyone can become financial literate – meaning they are fluent and knowledgeable on the topic of money. The payback on this is priceless. 

Money challenges are a major source of stress for most adults. When you are financially literate you can avoid these challenges.

Add these 8 simple tips to your financial knowledge:

1.    Be responsible for your finances. Take the time to read topics that pertain to your finances. Pay your own bills. Stay on top of your money. Avoid leaving the responsibility to someone else.

2.    Be aware of how you’re spending your money. Setting up a simple budget is the first step. Then track how you’re spending every cent, at least for the first couple of months. Everyone is surprised by how their money is being spent when they take the time to really examine the issue.

3.    Learn the differences between ‘needs’ and ‘wants.’ It’s not always easy to deprive ourselves of the things we desire. But if you can say ‘no’ when it’s appropriate, you’ll eventually be able to purchase essentially anything you could ever want. Many financial challenges are created by poor impulse control. This includes purchasing things you can’t afford and things you don’t really need.

4.    Keep track of your credit score. Credit scores become more important every year. It’s common for credit reports to have errors, so be sure to review your credit report every year. Take the time to learn about credit and how to build a strong credit profile.

5.    Don’t wait to start funding your retirement. If you get started early, you can save a lot of money quite easily. A little bit grows into a lot over 40+ years. Compound interest works like magic. If your company offers a retirement plan, be sure to take full advantage. The tax savings and convenience are spectacular. Your company might even match your contributions. Speak to an advisor and figure out a retirement savings and investment plan.

6.    Invest in your career. Spending money to further your earning power is money well spent. This can include job-related training, books, and formal education. Rather spend your time where it pays dividends. Hiring someone to mow your lawn isn’t out of the question if it permits you to spend time on more important, career-related activities.

7.    Protect your health. Health insurance is very expensive for most people, but hospital bills cost even more. Do everything you can to be as healthy as possible and find a way to afford health insurance.

8.    Have reasonable expectations. It’s unlikely you’re going to be living like your parents when you first head out on your own. It will take time to accomplish what your parents have spent years building. Patience is critical.

Many older adults have financial regrets – they wish they could go back in time and handle their finances differently. You’re in an ideal position to get started down the road to a healthy financial future. Take advantage of your unique situation. Remember, it’s much easier to avoid mistakes than it is to fix them.

 

IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.

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