Young adults must be taught about financial matters as early as possible. Unfortunately, this does not often happen because of various reasons. Firstly, man Filipino young adults fear to let third parties get access to their financial information. It makes them miss out on important insight from experts. It denies them the opportunity to make financially sound decisions. If you fall into this category of people, fear not! This article delves into the best 10 financial advice for upcoming young adults.
Self-control is an important skill that young adults lack. This is a skill that parents teach their children when they are growing up. It helps them learn to delay gratification and keep their finances in order.
Self-control makes young adults learn to be patient. It helps them only to buy items that they can afford. Besides, it helps them to learn to overcome the temptations of making purchases using the credit card. The skill helps them to learn to save until the money is enough before they make a buying decision. Self-control helps them to avoid paying unnecessary interests, which is a major expense young adults grapple with.
In the current generation, especially the generation of millennials, we’re used to instant things because of technology. As a result, we tend to be more impatient to get what we need or want. We forget the value of time.
Acquire a College Education
Although you may be planning to engage in activities that do not need a college degree, having the degree will make you a better person. In fact, going to college is a major investment that will enhance your earning potential. Not only an investment, but education can also make somebody confident enough to face his life’s challenges as an adult.
Even when your parents cannot pay the fees, young adults should go out of their way to ensure that they acquire education. Options such as taking on a part-time job, look for available scholarships, and even borrowing can help you acquire a college degree. Nowadays, there are countless not-for-profit organizations offer scholarships for less-privileged but deserving students. Furthermore, if you’re academically inclined, universities offer academic scholarships. You may need to start by attending the state colleges that offer very minimal matriculation fees before transferring to the university of your choice.
If you’re into skills, you can apply for short-term courses offered by TESDA accredited institutions to hone your skills.
Manage the Little Finances You Have
Learning to manage finances as early as possible is an asset. If you don’t, some people may want to find a way to mismanage it. We are not saying that you engage the costly financial planners. No! what we mean is that you need to get knowledgeable on personal finances. It can assist you to control your expenditure and help you to accumulate wealth. Also, learning the basics helps you to keep an eye on your finances. It will open your eyes to help you see when other people want to siphon your funds. Thus, understanding your net worth is a must!
Good thing that you’re on this site because you’re in the right place. I am like you, a millennial who wants to be financially free in the future. As much as I can, I will give you some important inputs that you can use on your journey.
Have an Emergency Fund
Even when you commit all your finances paying for bills, it may be a good idea to establish an emergency fund. It refers to the amount of money you put aside every month as your savings. This is the money you can quickly access when an emergency occurs. Yes, an emergency fund is a readily available cash.
The emergency fund is meant to provide you assistance to cope up in the worst-case scenario that might happen to you. For instance, one day you wake up jobless or decided to quit your current job. Unless you have the other streams of income, you need funds for sustenance. Basically, I keep the 3-month equivalent of salary as my emergency.
When this money accumulates to a reasonable level, it helps you relax. In fact, the more money you have for this purpose, the more relaxed you feel. Once you already secured your emergency fund, you can now decide what to do with your excess money, it can be additional savings or investment.
Selecting a Partner
Many people may not see any relationship between a partner and finances. They may even fail to understand how a better half can influence one’s finances. Indeed, the partner you choose determines whether you grow financially or stagnate. Choosing a partner whose moral and ethical values match with yours is the way to go. It helps you develop trust and listen to their pieces of advice when making financial decisions. A partner who is always angry and critical of everything you do could not be the best. They may not be of help when it comes to making decisions on financial matters.
Learn to Diversify your Portfolio
The old saying that dissuades people from putting their eggs in one basket is as relevant today as it was centuries ago. When promising investment opportunities show up, do not hesitate to grab them. Of course, some investments may be a bust, while others could bring you good fortune. So, evaluate the project you want to undertake and, if satisfied, invest your money in it. Make it a habit to invest in new ventures every two years. The stock market, real estate, and mutual funds offer an array of investment opportunities you may need to consider.
Save for Retirement
The young adults will laugh off when you tell them to start saving for their retirement. What they forget is that when they start early, they can generate enough resources that can cover a greater part of their retirement. Think about investing in retirement saving plans. Also, ensure that your savings in such plans is consistent. Time value of money Dude!
Understand how Income Taxes Work
Learning how income tax works is vital. It should be done even before one gets the first paycheck. It can help you plan the taxes to pay to avoid problems with the taxman. It also helps you to know whether the job you are about to take will leave you with enough money for sustenance after paying the taxes.
Invest in your Health
Your health is as important as any other investment you make. As such, it is a worthy idea to invest in it. Having a health cover can help you here. Note that health management is expensive and could wipe out your savings at once. But when you have a health cover, it will take care of your health-related expenses and leave your savings intact. All of us are prone to accidents; so, you need to be prepared for them. When an accident occurs, it should find you prepared. Other than that, you must keep yourself healthy. Eat plenty of vegetables and fruits at all times. Also, you should neither smoke nor consume alcohol in excess.
Protect your Wealth
Generating wealth is one thing, and protecting it is another thing altogether. Most young people acquire the skill of generating wealth from their parents but miss out on protecting it. Here, you may need to take steps that will help you protect your hard-earned money. Get an insurance cover to help protect your assets from things like fire. Think about covers such as disability income insurance. The cover can continue to provide you with a steady flow of income in case of injuries or illness.
Of course, there are many pieces of financial advice that young persons should be helped to understand. But these 10 are the most important ones. Try all of them to determine those that will work for you.