Managing your money can quickly get stressful and confusing. If you’re not careful, money can end up negatively controlling your life. Being proactive with your finances ensures you have a healthy relationship with money. Here are seven personal finance tips you can use as a young adult.
1. Use Just One Credit Card
Keeping things simple with just one credit card is a smart way to do things. Even though you’re probably getting a bunch of credit card offers in the mail, none of them are worth the hassle. As a young adult, you probably don’t have the best cash flow which makes using a credit card difficult.
Credit card companies target you because they know young adults are more impulsive. Prove them wrong and use your credit card responsibly. Sticking to one credit card is especially important if you’re already in debt, more debt isn’t going to help.
2. Keep Track Of Your Credit Score
Don’t just assume you have good credit, take the time to find out what your credit report is saying. Staying current with your credit report ensures no one is using your identity to borrow money or take out a loan. Knowing what your credit score is also helps you stay motivated and make better decisions in order to improve your score. If you can keep a good credit score going into a high paying job, life will be much simpler.
3. Start Saving Early
Retiring with debt is not a situation you want to be in. Start saving for retirement as soon as you can. Pay down your high-interest loans first and as quickly as you can. It’s important to get rid of your debt while your earning potential is still high. The earlier you start saving for retirement, the more you can take advantage of compound interest.
4. Explore Repayment Options For Your Student Loans
When it comes to student loans, you always have options on how you can deal with them. Many people make the mistake of assuming there’s nothing they can do which causes them to just blindly make the payments.
A lot of lenders have options to make your payments more affordable. You can do things like consolidate your loans or switch to income-based repayment. Explore what options are available to you instead of blindly throwing money at your loans that you could be saving.
5. Take On Smart Debt
Debt can be useful if you’re using it for the right thing. Don’t make the mistake of using a loan to buy something like a car. This will only hinder your ability to use your credit since you’ll likely still be paying for the car by the time you’re ready to buy a house. Think about how long you want to pay down your debt before you use credit to buy things like snacks or gadgets you don’t really need.
6. Track Your Spending
Tracking your spending adds a visual element to your finances that you can’t unsee. Once you see how much money you have coming in and going out, you’re going to want to hold on to more of it. You can use a program like Excel or a financial app on your phone. Tracking your spending will help you make budgets that you can actually stick to and make better decisions with your money.
7. Think About The Future
Your 40s, 50s, and 60s may seem far off, but it’s never a bad idea to start preparing. We never know what type of emotional or physical challenges were going to face in life. You can take advantage of best GIC rates by starting early. If you’re in a position where you’re working for your money, you owe it to your future self to build a safety net to fall back on.