Personal Finance for Young Adults
Personal finance is often a tricky subject for people of all ages. As a young adult in your teens or twenties, it’s important to get a solid grasp of personal finance right now in order to avoid common mistakes. Young adulthood is a critical time of development, and you have the potential to set yourself up for a lifetime of financial success by following these guidelines.
Pay Off Debt Early
If you’re a college student, it’s likely that you’ve already taken out student loans. The average college student graduates with approximately 30,100 dollars of debt to pay off. If you know that you’ll be responsible for paying off your own student loans, make every effort to start minimizing the debt as soon as possible. If you plan to work part-time in college, start making small payments towards your loans in order to make a sizable chunk in the debt even before you’re finished with school.
Start Saving Now
Unfortunately, studies have shown that Americans have a hard time setting aside money for the future. Of 7,000 people polled, 34 percent had nothing in their savings account, and 35 percent had less than 1,000 set aside. To secure a prosperous future, it’s absolutely essential to start saving as much as you can as early as possible. While it’s a great goal to put aside 20 percent of your total paycheck each month, it’s okay to start small as a young adult. Since prioritizing debt payoff is also important, saving ten percent of your paycheck is a good place to start.
Save on Auto Insurance
If your parents stopped paying your auto insurance bill once you left for college, don’t stick with the same company just because that’s what’s familiar. In fact, you’re more likely to save money on car insurance when you speak with a local insurance agent. By taking the time to call around and shop for the best rates, you could save over one hundred dollars each year. Even though that doesn’t sound like much, it adds up quickly and you can use that money to bolster your savings or pay off debt faster.
Track Your Spending
As a college student, you probably spend a sizable chunk of change each week on going out with friends. While socializing is an important part of the college experience, it’s even more important to set yourself up for financial stability during and after college. Track your spending for a minimum of one week using an app like Mint and honestly evaluate what needs to change. If you’re spending more than 20 percent of your income on wants instead of needs, it’s time to scale back and look for alternative entertainment and food options. Or, find ways to supplement your income with a side hustle.
Invest in Insurance
If you’re renting your living space, it’s important to invest in renter’s insurance to safeguard against emergencies. Even if it seems like your possessions are worth only a modest amount, think again. If you have basic furniture pieces, a laptop, television, and cell phone, would you be able to cover the cost of replacements if your apartment was destroyed in a fire? If not, then talk to an agent about getting renter’s insurance. The small monthly fee is a must-have if you don’t have enough savings to cover necessities in the event of emergency.