Financial Basics For Young Adults
~Getting started on a lifetime of good financial management~
Key Concepts of Personal Financial Management!
Being on your own can be exciting, but it comes with many responsibilities. Financial literacy will serve you very well as you launch your adult life. Here are some key financial concepts for this important stage in your life!
It's the cornerstone of good financial management at any stage in life -- no matter how much, or how little money you have at the moment. When you start supporting yourself, it's very important to have a plan. Write down all income, all required expenses, and your short- and long-term goals. Make a plan for saving and spending. Keep an eye on day-to-day spending, which is an area where it's easy to blow the budget -- especially when parents are no longer contributing. Good budgeting skills can make the transition to being on your own much smoother.
2. Banking Skills:
As you know, credit unions have higher savings rates, lower loan rates and low or no fees. Find out what services will benefit you: Get a low-interest-rate credit card if you qualify, opening a checking account and savings account, and ask for help in choosing the right additional services for your situation. If you don't already know, learn how to balance a paper checkbook or to use personal financial management software. Ask questions, read up on financial basics and visit your credit union for help if needed.
3. Expenses, Expenses:
Many new expenses will crop up as you start life on your own: rent, insurance, doctor and dentist visits, food, transportation costs, utilities and more. It can seem overwhelming. Get a firm handle on your expenses by using a budget. You'll know where the money is going, and, more important, you will have a much better chance of having enough money to cover all those additional expenses.
4. Credit & Debt:
Will all those new bills, it can be tempting to run up the credit card or take out another loan. Be smart about credit. Over-extending yourself and missing payments can lower your credit rating. Does that matter? You bet it does! A low credit score can affect your ability to get a job, rent an apartment, obtain utilities, be approved for a car or school loan, and more. Don't risk it. Debt is a top financial problem for young adults, and it has long lasting consequences. A credit card is great, when used properly. Make payments on time and don't spend beyond your means. If you do find yourself in over your head, don't just ignore the situation. Act immediately: Contact creditors, find a competent credit counselor and come to the credit union to get help!
When times get tough, you may be tempted to turn to the Bank of Mom & Dad for a bailout. Many experts advise parents to resist the temptation to save young adults from their financial mistakes. Whatever your decision, this is at best a temporary fix to a potentially serious problem. Responsible financial management from the start is a better choice.
In the excitement of striking out on your own today, it may be difficult to focus on what's ahead in a few years. But it's important to consider long-term goals now: marriage, home ownership, children, etc. An important financial lesson is to save a portion of everything you earn. First, set aside some funds for a rainy day -- an unexpected car repair, health bill, etc. Then consider even small, regular deposits to a savings account toward those long term goals. It's even not too early to start thinking of retirement -- you can open and start funding an IRA regularly, even if the contribution is small. Try to at least contribute any amount that your employer will match. You'll be surprised at how fast regular savings amounts will add up.
7. Your Future, Your Goals:
Effective financial management can mean the difference between a good life and a stressful life. Make the effort to follow through on these key concepts and you will get your adult life started out on the right foot.
8. We're here to help:
The credit union is a great resource. As a member-owned, not for profit institution, the credit union's focus is on education and member-oriented financial services. We'd be glad to help you set up accounts or answer questions. We are here to help you prepare for a lifetime of good financial management!
Any Questions??? Visit Us Online!!! www.svdcu.org