Whether you're headed off to college or entering the career world, leaving home brings a whole new set of learning experiences. For most young adults, managing their own finances can have the steepest learning curve. But you can get ahead of the game by applying a few simple tips for controlling your finances.
1. Educate Yourself
Take charge of your own financial life and your future by learning things for yourself. There are a lot of questionable advice out there and a lot of great opportunities, but you have to learn how to distinguish between the two.
Get some personal finance books for free at the library, read personal finance blogs online, and look up financial terms you don't understand. Thanks to modern technology, you can learn a lot more - and a lot easier - than your parents and grandparents could at your age, so take advantage of that.
You'll soon see the value of making your money work for you. Whether it's by investing even small amounts regularly, using credit as a leverage to gain new skills or meet specific expenses, or smartly using rewards programs, you can start putting together a financial plan that works for your specific personality and situation.
2. Control Debt
Once you head out on your own - and particularly once you get a decent job - companies will begin spamming you with credit opportunities. Assess them carefully, though, realizing that debt can be a slippery slope. If you have to use credit or debt, make a firm plan for paying it off quickly and stick to that plan. Avoid using debt to pay for ongoing life expenses, but recognize its value during emergencies and unexpected oneoff situations.
Before signing up for any debt, make sure you understand the terms of repayment, what happens if you fail to pay it back on time, and what is the interest being charged.
3. Make a Spending Plan
Budgeting is a dirty word for many people, and young ones often have little experience in creating a budget. Call yours a spending plan instead and take the stigma out of it. A spending plan allows you to understand that you still need to spend money in order to live, but you need a plan for doing so in a smart manner.
Make your spending plan realistic by including things like recreation, entertainment, dining out, and other fun items. Just be aware that you may need to do some things less frequently and perhaps find cheaper alternatives so you can still have a good time. By being balanced with both needs and some wants, you will be more likely to stick to your plans.
4. Minimize Loans
For most students, loans are a fact of life. But the less you have to take out now, the better off you will be in the long term. It will leave you with more choices and the ability to pursue your dreams with less stress. Avoid living on student loans beyond tuition costs. If you are approved for extra loan funds, consider paying them back immediately to shorten the life of the loan.
Have short-term expenses until summer jobs start, or need deposits for room and board? Try a short-term loan like a signature loan rather than a long-term obligation with more interest. And look for ways to find basic employment within your future fields of interest that provides both a steady paycheck and added experience.For more help finding ways to better manage your money, talk to the experts at The Loan Lady today. We can help you start taking control of your own finances today.