Knowing how to manage your money isn’t easy, especially if you’re young, as it requires commitment, dedication and sacrifice. The approaches to managing finances may change when you grow up, advance in your career or have changes in your family. But the underlying essence of a secure financial future remains the same — accept inconvenience for a better tomorrow. While later in life, you can manage money like a boss, here’s how to get started on your finances.
Why you should manage money when you’re young
Unlike previous generations, Gen Z has unlimited access to expert financial advice on the internet. Surveys show that 38% of Gen Z learn personal finance from social media, 22% learn from their parents and 17% learn from a high school or college.
Even though experience is the best teacher, secondhand knowledge from reliable and trusted sources will help you avoid commonly made or even costly mistakes your parents might have committed without expert guidance. Whatever you do, consult with a financial advisor by paying a fee or read from trusted sources on the internet. Social media can misguide you with all unverified or wrong information. Here are some simple and practical financial habits that can yield good returns in the future.
Save, even when you’re young
Saving is hard, but not having a secure financial future to meet basic needs and commitments in your 30s, 40s or 50s is harder, or even terrible. Having a balance between saving and relishing will surely help you not only to stay afloat but also to have a strong emergency and retirement fund.
One of the best practical ways to save is to have a high-yield savings account and schedule automatic deposits or transfers as soon your salary is credited. This way, you will not be able to spend beyond your available budget even if you try to.
Learn about investing
Money that you don’t need any time now should not be left in some account with low-interest rates. When you invest wisely, the money will grow without you working hard for it. There are several risk-free and risky ways to invest.
Risk-free investments entail assured but very low returns and high-risk investments can get you a lump sum in one day or might whip your portfolio in an instant. If you’re interested in investing, talk to a financial advisor who will help you with the best investment strategy in accordance with your dreams, current situation, and risk tolerance.
Saving for retirement isn’t something that you should plan in your 40s. Many popular financial advisors confess they had contributed to a retirement fund sooner, rather than waiting for several years after starting their career.
Most workplaces will have a 401(k) plan. If your workplace doesn’t offer retirement plans or health insurance, you must sign up for the best plan on your own.
Not all debt is bad
Work to have a clean credit history by using a credit card wisely or getting some loans on record. This will help you be eligible for a significant loan like a mortgage or line of credit. However, you must not use credit recklessly and end up with debt you cannot repay. That’s one of the most effective ways to manage your money when you’re young.
Don’t be too hard on yourself
Spending money surely brings us joy and keeps us going. While trying your best to save as much as possible, don’t be too hard on yourself. Don’t miss out on the joys you shouldn’t miss while living to the fullest every day! If a cup of hot chocolate after a long tiring workday keeps you going, don’t stop the practice completely. Instead, treat yourself once a week. Don’t stop going on date nights, instead, try cooking at home or going out for a dinner once a month. Never get into stress or anxiety trying to maintain financial discipline. Save money only when you have a cheaper alternative. Don’t sacrifice memories, sacrifice only the extra.