Hi everyone! I hope you are having an amazing Thursday. Emily from Mighty Moms reached out to me to do a guest blog post on finances for teens and young adults. I read the article and she offers some great advice. Be sure and check out her website, too.
A Head Start – Financial
Tips for Teens and Young Adults
From
first part-time jobs to college graduations, your teens and twenties
offer plenty of moments of financial transition. These milestones
aren’t just a sign you’re growing into an adult; they’re also a
great opportunity to begin learning how to manage your money like
one. Here are a few tips for the young or soon-to-be adult looking to
give themselves a financial head start.
Track
Your Spending and Start a Budget
It’s
enormously difficult to make changes before you know what, exactly,
you’re changing. For a few weeks, just
keep track of where and how you spend your money. You
can do this in a budget
app, spreadsheet, or even just an old-school notebook.
Whichever
method you use, make sure to note the date, total, and location of
everything you spend. You can also make a few notes to give yourself
an idea of how you might categorize that spending once you’ve
reached that point. For example, next to the line tracking filling up
your gas tank, you might note, “Car,” and next to a ticket to a
movie, you might note, “Entertainment.”
Once
you have a sense of how you spend your money, you can start trying to
build
a budget. Set aside a specific amount each month into
your spending categories, and commit to keeping your spending within
those limits. Track every purchase, and check in throughout the month
to see how you’re doing. It will take practice, so don’t get
discouraged if you don’t nail it right away.
Consider
Future Expenses
Generally
speaking, the younger you are, the fewer expenses you have. If you
still live with your parents, your room and board are likely covered,
leaving you with plenty of income. Even if you’re out of the house,
you may still be years away from childcare costs, medical expenses,
mortgage payments, and other future expenses.
Here
are a few down-the-road items it’s wise to start saving for early:
- Retirement – The sooner you start saving for retirement, the better a position you’ll be in once that stage rolls around. Putting 5 percent of each paycheck into an IRA or company retirement fund will set you up for financial stability in your golden years.
- House Payments – If you think you may want to own property, start saving for a down payment earlier, rather than later. When it comes time to buy, you’ll want to have enough saved up for a 20 percent down payment. Less than that, and you’ll see costly mortgage insurance added onto your regular mortgage payment.
- Car Costs – Just like with a house, the more money you set aside for car costs, the more power you’ll have when it comes to purchasing a car. However, keep in mind that car payments aren’t the only cost associated with driving. You’ll also need to save for repairs, gas, and insurance. Auto insurance can be one of your higher expenses, particularly depending on your age and gender. Where you live and the type of car you drive can also impact how much your insurance costs, so it's best to maintain a good driving record and to even take defensive driving courses if you want to work toward lower payments.
Make
Useful Goals
Once
you have a sense of your budget and what kind of expenses you can
expect in the future, you can start making goals. However, it’s
important to make goals that are clear
and detailed. A goal like “I want to save for a
house” is fine, but “I want to put away at least $200 a month so
that in 10 years, I’ll have at least $24,000 to go toward my down
payment” is better.
Whatever
goals you decide to focus on, create a clear plan for how to achieve
them and stick to it. Do this, and you’ll be ready to take on the
future.
Photo
Credit: Pexels
