The importance of good financial planning should never be undermined. If one starts on a good footing from the start, you will have a solid retirement plan.
Schools, colleges, universities, academies educates students geography, mathematics, history…and the likes…but they don’t teach you about how to build your career and to manage your finances.
This should be a part of a high school curriculum to teach young adults how to manage their money, apply for credit, save and invest money, and how to stay out of debt. Learning about the world economy is simply not enough.
Let’s look at some of the top personal financial ideas young adults should have.
1 - Giving Yourself Enough Time to Weigh the Pros and Cons Before Making a Big Purchase or Splurging
Delayed gratification is one of the healthiest financial habit one can have as a young adult. This financial advice will take you far and make you a wiser consumer. Most people purchase on impulse and on credit which could result in debt in the future.
Whenever possible, pay with the cash you already have in hand, not on credit. This could also mean you would be delaying the purchase while you save up enough money to buy what you want.
It is an essential life skill to healthy personal finance.
No doubt, credit cards are great to have and will prove to be useful. On top of that, credit cards, be it a virtual one (as common as it is now since we are transforming into a more digitally viable world now) or a physical one, offer great rewards. When you make regular payments on time, you actually build a good credit score.
Having a credit card is also almost a requisite for emergencies.
2 - Educate Yourself About Good Financial Habits
With the internet and so many masterclasses and online classes offered by experts from all around the world, take the opportunity to learn about good personal financial habits. If you don’t learn how to make financial decisions wisely, others, even if they come with good intentions, will find ways to mismanage it for you.
Their priorities and life choices are different from yours and, unfortunately, some of these people may come with ill-intentions. This financial advice may even come from family members or relatives who do not fully know or understand your financial situation.
Take charge by learning basic rules about managing your money and arm yourself with knowledge.
3 - Pay Yourself First and Save
Most young adults, upon receiving their salary, would, without a look back over their shoulders, will start spending with nary a second thought. Their first salary is the first mark of their newfound financial independence and freedom. It’s normal for them to feel elated and start spending with zeal.
For most young adults without proper financial advice and guidance would live paycheck to paycheck. Little do they know, saving early is the biggest favour one can do for themselves. Even on the smallest of salaries or tightest of budgets, a small percentage of monthly savings will go a long way.
4 - Health First, The One Thing Young People Rarely Think About
Healthcare is one of the most costliest expenses in the world. Every time you find yourself in an emergency room, whether for a minor injury or an expectedly major ailment, the hospital bill can be shocking.
The advice most personal finance advisors will give is to pay for a monthly health insurance plan if possible. If it is not, there are always other options to provide yourself with the rope of hope.
For example, if you are employed, ask about health insurance coverage. Some governments and the Ministry of Health provide health plans for those who cannot afford their own health insurance.
Although this is not financial advice per se, staying healthy and eating wisely as a part of your daily routine matters more than you can ever imagine to your future financial health.
5 - Protect Your Savings and Wealth
If and when an emergency occurs, you should take steps to protect your finances and personal belongings. Because you might deplete your savings when things go south, it makes sense to invest in a retirement insurance plan.
Most insurance companies offer this for individuals who are looking to put aside a chunk of their income for a predetermined period of time.
If you’re renting a home and are afraid that your possessions will be taken from you, consider Home Contents Insurance, more commonly referred to as Renters' Insurance. The Home Contents Insurance protects the contents of your home in the case of unfortunate instances like burglary or fire. However, be sure to read the fine prints before signing on the dotted line.
Not everyone’s good with money. So, if you need someone to help you manage your finances or help it grow, it’s wise to hire a fee-based financial planner who can provide you with advice. A fee-based financial planner has no personal interest in what you earn, unlike a commission-based financial planner. Oftentimes, their advice is reliable because they are unbiased.
Before You Go…
When you’re young, having financial freedom can make you feel like you can do or buy anything. This kind of ambition must come with a prudent mindset. You may want to start investing in stocks, go on a shopping spree, start a business, go on a yearly holiday with your family or friends.
All of this is possible only if you know how to put your money to good use and PROTECT IT.
Needless to say, if you’re good at budgeting, all the better.
If you have a dream to start a business, INFT might just be the right financial partner for you. We offer a myriad of financial services and digital financial solutions that can help you launch your own business.
Sign up for your free INFT account today!
Don't forget to sign up for our newsletter by completing and submitting the form below!