3 Financial Management Tips for Young Adults

 

Due to the lack of financial education in educational institutions, many young adults entering professional life don’t know how to manage their finances. Therefore, young adults between 18 and 29 in the United States owe US$1 trillion in the form of student loans, credit card debt, mortgages, etc. Many have trouble managing their finances and repaying loans to lead a debt-free life.

 

However, here are some financial management tips to get young adults started on a more financially-balanced life.

 

A young adult counting their finances
A young adult counting their finances

Start an Emergency Fund

One of the best financial management tips every young adult should follow is to start an emergency fund and put some amount there annually. No matter how many credit card bills or student loans you have to pay every month, saving a small amount of your income is a must.

 

Having money that you can use in emergencies can keep you safe from financial challenges. In addition, this method would help you develop a habit of saving regularly, which would also benefit you in the future. Once you have enough money, you can even divide your emergency fund into retirement savings and a yearly vacation fund.

Pay Taxes Regularly

Another subject that educational institutions fail to teach their students is the importance of paying taxes. Therefore, many young adults fail to pay their taxes on time, resulting in them having to pay a financial penalty later. Young adults should know how income taxes work before entering the professional world. When different organizations offer you a starting salary in offer letters, you should know the taxes you would have to pay on the salary.

 

In addition, you need to determine if the salary would be enough for you after paying all the taxes. You can use online tax calculators to find out how much tax you would have to pay on your income. Never miss paying taxes if you don’t want to pay an additional amount to the IRS alongside.

Invest in Insurances

Saving money or purchasing assets isn’t enough! You also need to guard that money and assets; the best way to do that is by investing in different insurances. For instance, if you’re renting a place, get a renter’s insurance to ensure that you will get financial compensation for a burglary.

 

A young adult calculating their taxes

Learn More About Financial Management from CFA Charterholder

With the help of these tips, you can manage your finances to some extent. However, if you need more financial management knowledge, you can reach out to Morgan Stanley Faraco , a CFA Charterholder. He’s currently a teaching assistant at the University of Chicago in the Financial Mathematics program. In addition, Francisco Jose Faraco has worked with numerous national and international organizations and banks.

Comments

Post a Comment

Popular posts from this blog

Francisco Faraco Answers the Most Frequently Asked Questions About SROs Like FINRA

Image
An SRO or self-regulatory organization  may be affiliated with an organization or government, but it’s a standalone body that protects stakeholders by regulating a certain industry or profession. For instance, FINRA (Financial Industry Regulatory Authority), a financial SRO, has gone as far as to set up FINRA BrokerCheck  to keep professionals in check. In today’s article, Francisco Jose Faraco  answers the most frequently asked questions about SROs. Does the Government Regulate SROs? Although SROs are self-regulating bodies, they are subject to government scrutiny and regulation. You see, SROs are an extension of government regulation. They can exercise the same power level because they represent the government to a certain extent. Therefore, the government will regulate how SROs regulate an industry or profession. Not only that, but it’ll also demand a policy change should things change on a political level. To What Extent Can an SRO Exercise Its Authority? SROs don’t a...
Read more

A Guide to Starting Your First Business

According to recent  Bureau of Labor Statistics  findings, almost 20% of startups don't make it past a year. In other words, for every ten startup businesses, two are destined to fail before their first anniversary. Follow this guide to start a successful business and be the lucky eight to thrive in an increasingly competitive market. Analyze the Market A business idea may seem lucrative initially, but it could also be saturated with competition. Survival in highly competitive environments is only possible if you have something different to offer your target audience. You can't know your unique selling proposition unless you're aware of what else is out there. That's where market research comes in. Start with current data—use questionnaires or interviews to gauge whether people would buy a certain product or if they'd much rather pop into their nearest Target.  You can also use current data, such as recent statistics or census, to analyze the market. Alternatively, ...
Read more