7 Money Tips for Young Adults
Whether you have young adult children living with you or on their own, the time to talk to them about managing money is yesterday.
We can’t just leave them on their own to figure this stuff out. Or they could get into bad money habits early on, that can stick with them the rest of their lives.
So what’s the best advice to give young adults, as they create a life and family of their own?
Here are 7 Money Tips to pass on to your young adult children sooner rather than later:
Money Tip #1: Don’t try to live a high lifestyle like your parents, your friends or your neighbors live.
There is plenty of time for living the big life if you want to. Now is the time to establish a solid financial foundation. And adopt good money habits that you stick to no matter what.
Money Tip #2: Always pay yourself before you pay anyone else.
When paychecks come in at the end of the week or end of the month, the first thing to do is pay yourself. Put a portion of that money in the bank or your retirement account. Otherwise you could end up spending a lot of it.
Money Tip #3: Put your money somewhere where it will grow on its own.
Money that grows on it’s own takes advantage of something called “compounding interest.” The best place to tap into this money growth is by putting cash into a retirement account that generates dividends that are automatically reinvested in your account.
Money Tip #4: Sock away money in a rainy day fund for covering unexpected emergencies.
As the saying goes.. “you never know what tomorrow will bring.” Well you can feel better about the unknown by having a chunk of cash in a “rainy day” fund. This way you’re prepared for unexpected expenses.
Money Tip #5: Spend wisely, using the 50-30-20 Plan.
This is an easy way to manage your finances, so you’re always being good with your money. Just look at your income in three groups: 50% for your needs, 30% for your wants, and 20% for your savings. Sticking to this rule will ensure your finances will be in good shape.
Money Tip #6: Don’t wait for tomorrow when you can save today.
If you haven’t been saving till now, the worst thing you can do is wait for the right time to start. The right time is always now. And once you start, you’ll see it’s much easier to save going forward.
Money Tip #7: Save more than you invest in things more likely to vary in value or lose value.
You should always be saving money. Putting most of your savings in the stock market instead may not be such a good place for your money, as market volatility can decrease the value of your assets.
Now parents, just have your young adults follow these powerful pieces of advice, and they won’t be as likely to come to you 5 times a year asking for money.
And they’ll develop the knowledge and skills needed to not only survive on their own, but thrive and prosper.