7 Tips for Being a Financially Responsible Young Adult

One of the scariest aspects of entering adulthood is the weighty responsibility of managing your finances. Even if you’re well-prepared and financially literate, managing money is not always fun! So, we’ve compiled some tips to help you become a financially responsible young adult!

Educate Yourself

Take initiative and own your financial literacy. Multiple money management books, resources, and tools are at the public’s disposal. Check out these books as well as Financial Peace University. Find a mentor to coach you and keep you accountable.

Use Cash, Not Credit (Mostly)

Generally, paying cash is wiser than paying with credit. While credit cards are alluring, they are easy to abuse, causing you to rack up thousands of dollars in debt you must repay with interest. So, resist the temptation and build the habit of using cash as much as possible.

On the flip side, wisely using a credit card can boost your credit score to help you obtain future loans. Practice discernment when using a credit card. Keep your spending below 30% of your credit limit, and try to pay it off monthly.

Build an Emergency Fund

As your expenses grow, building an emergency fund is critical. A good rule of thumb is to save anywhere from three to six months’ worth of living expenses. This practice spares you unneeded stress if you find yourself unemployed.

Focus On What’s Important

When you start earning money, it’s tempting to conflate wants with needs. You need a car—but you don’t need a 2024 Chevrolet Corvette! You need to eat, pay for school, and cover basic living expenses— but you don’t need steak dinners, etc.. Lesser priorities may have to fall by the wayside. Ultimately, learning to prioritize your spending is a skill that will last a lifetime.

Learn How to Budget

Along with learning where to spend your money, it’s essential to learn how to spend it. Creating and living with a budget is foundational to financial responsibility. Track your dollars and map out how you will spend them each month. Take control over your money by telling it where to go!

Start Saving

It’s never too early to start investing and saving for retirement. Your golden years may feel far away, but don’t let that feeling fool you. The days may be slow, but the years pass quickly! So, start saving today! Due to compound interest (interest earned on saved money + previous interest), your initial investments will only grow over time. Saving early in life maximizes your accrued assets and your future financial security. Find a financial advisor you trust to help you get started!

Learn About Taxes

Regardless of your income level, you must pay taxes for the rest of your life. Learning all you can about federal and state taxes, tax brackets, and how to leverage retirement accounts to minimize tax burdens is invaluable!

At the Robert Joseph Group, we combine our years of experience to provide real solutions to our clients and job seekers. By offering a targeted recruiting strategy, we match top-tier candidates to top-tier companies. Contact us today to begin!