“Welcome to the real world! It sucks; you’re going to love it!” Monica Geller just summed up our entire adult life in a single sentence. From paying the rent to food and other expenses, we have to manage it all. The need for financial planning has become a burning issue among young adults today. Owing to our lavish lifestyle and the ever-increasing cost of living, concepts like money management and savings have gained a stronger foothold in the economy.
The Art of Self Control
Adulthood is not just confined to getting a job and earning some money, most of the time it’s about learning to compromise and master the art of self-control. Parents usually drill the habit of savings in kids from an early age - a habit that proves to be extremely useful in their adulthood. Learn to prioritize, a carton of milk or a month’s rent is any day more important that those new shoes or a high-tech gadget.
Be smart when taking a loan
Almost everyone needs a loan at some point in their life. When you are in a need of some extra cash, be sure not to pay too much for your loan. Banks and online lenders offer several loan products which generally have major price differences; comparing the loan rates can save you lot money. Financer.com is a comprehensive loan comparison service where you can compare loan rates and find the best loan suited to your needs.
Keep a Track of Your Expenses
The most obvious solution to effective money management is keeping a track of your expenses to know exactly where all your money is going. The first thing you must do as soon as you get your pay check is prepared a budget and divide the earnings into expenses, savings and surplus. There are loads of applications online where you can store receipts, monitor your expenses and manage the cash better. Try reducing the recurring expenses and stick to just the bare minimum.
Start an Emergency Fund
Starting an emergency fund is one of the smartest decisions you can take. We are all familiar with how compound interest works, the sooner you start saving the more money you’ll be getting later. An emergency fund is a portion of your budget that is kept aside as savings and used only for extreme emergencies. The fund is different from your regular savings, i.e. you should not use the money unless it is absolutely necessary.
All About Taxes
It is important that you understand the intricate working of the tax system and know exactly where and how is your hard earned money utilized by the government. Before you even get a job, you must look into the tax bracket that you have to pay on your salary every month. Income tax is mandatory and a significant part of your annual budget. You can easily find online tax calculators that assist users in calculating the tax payable without any complications.
We know that retirement feels like a lifetime away when you’re in your youth, but it never hurt anyone to be well prepared! Future planning (even the future that seems eons away) is an imperative aspect of financial management that everyone has to deal with. Invest in good retirement plans that offer a consistent sum of money every month in your old-age. Company sponsored plans are usually the best as it offers a higher interest than the ones you get in the market.
Guard your Health
Getting a life insurance is perhaps the first and foremost thing any adult should be doing. Your health is of topmost priority. Getting a health insurance prepares you for emergency medical situations. You never know what disease or accidents you’ll have to suffer from later in life, the best you can do is be prepared for it.
Manage your Wealth
Money management is a necessary life hack that is not taught at schools and universities. Most young adults are confused as to what to do with their earnings due to lack of proper financial planning. Learn to manage your wealth and guard it smartly so as to be always prepared in case of any untoward situation. The best way to battle the uncertainty of the future is by ensuring everything we have today. From car insurance to renters insurance, get a plan for all your assets. And when it comes to investment, you must read and follow Richard Branson and Barren Buffet. According to Soho Studios latest blog post, Richard Branson never rests and recently added a new venture combines old standards like musical performances with massive participatory activities. So being an young adult, you can invest a portion of your earnings in stocks, shares and real estate for higher profit and there're plenty of other options.