A Young Adults Guide to Take Control of Finances
The topic of money is sensitive for most people, yet it’s a part of life that many struggle with. According to the Milken Institute, only 52% of U.S. adults could correctly answer financial literacy questions. Steps have been taken by schools and community banks to find solutions to this problem by implementing financial literacy courses. In our years of involvement in our local communities’ financial education efforts, we’ve found that these 5 steps are the key to take control of your finances.
1. Seek Wisdom
There are mountains of books, blogs, podcasts, and videos that you can learn from. If you don’t know where to start, look for resources within your community and network of friends. Be humble and listen to people that have experienced more life. You’d be surprised at how many people are willing to share their insight based on their past mistakes and successes.
2. Map Out Your Budget
Anyone can make a budget, but most have trouble sticking to it. Setting a budget is your best tool to control your finances. It helps you create financial discipline and visualize your spending habits. If you’re not fond of keeping receipts or logging expenses, there are budgeting apps you can utilize that will track and organize your spending for you. For example, Flatwater Bank’s mobile app allows you to set budgets and transaction alerts.
Remember to be realistic when setting your budget. If you normally spend $200 a month of fast food, it isn’t realistic to commit to no fast food in a month. Maybe you start by setting a goal of $150 one month and then reduce this budget after.
3. Prioritize Your Spending
How many unused subscriptions do you have running? Do you really need all the video and audio streaming apps or can you survive on two so that you can contribute more to your student loan payments? Your budget will help you see where your money is going and cut out unnecessary expenses.
4. Be a Savvy Saver
Make saving a necessity by automating it. You can set up recurring transfers from a checking account to a savings account every week or month. The important thing is to keep a minimum savings amount so that there is always something going into an emergency fund. Even the smallest amount can add up over time. As you cut expenses or save in other areas of your budget, you can decide how to reallocate those funds.
5. Start Investing
A common myth is that you need a lot of money to start investing. If you are fortunate enough to work for a company that offers a 401(k) match, take advantage of it. Outside of that, you can work with a financial advisor to help you find the best strategies for your unique situation.