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Special thanks to Sophia Young for this post on how to manage your finances.
Personal finance is a subject that is unfortunately not taught in schools, or at the very least, not in enough schools. One of the most difficult changes that the average college graduate deals with is managing their finances. They may know what a parabola is, but they don’t know how to pay their loans.
Today, let’s talk about the things young adults need to know about their finances, and how they can stay afloat on their first job.
Set Your Priorities
Self-control is one of the first things you need to learn now that your finances are managed by you.
Many young people tend to get overexcited about their first paycheck and start using it to buy the things they’ve always wanted. In doing so, they forego thinking of their practical needs now that they’re taking care of themselves.
While wanting to buy all those cool things you’ve always wanted as a kid is perfectly normal, it’s still important to have self-control. There is nothing wrong with a little bit of luxury now and then.
After all, we work to live, not live to work. However, you must be sure that your health, emergency funds, savings, loans, and everyday living costs go first. The earlier you can get that student loan debt paid, you can get started on the things you rent to save up for.
Save for Emergencies
Make sure you have an emergency fund to act as a net for yourself in case of financial trouble. No matter what, your priority should always be you.
While some may believe “I’m a careful person, and I’d rather pay off my debts first” is okay, it’s not worth the financial and physical risk. This emergency fund is great because it can be used for so many things.
If you’ve managed to stay safe until retirement, guess what, the emergency fund is now a retirement fund as well.
Need a vacation for your mental well-being and to spend time with loved ones? You can tap into your emergency savings while you aren’t actively working. Got into an accident? No need to break the bank for recovery, just use emergency funds and insurance.
Staying healthy isn’t just good for you for safety reasons, but it can also be a financial gain. Of course, getting sick sometimes is inevitable. That’s one of the quirks of life.
However, you should take as much care to avoid injury and sickness. Simple things like not going out in the rain if you don’t have to, taking your vitamins, and general not-hurting-yourself activities can save you an expensive trip to the hospital.
Make sure that you get insurance ASAP. If your work provides health insurance, then that’s even better. This saves you a lot of the time needed thinking about the paperwork as your company does it for you. Otherwise, do your research into the best insurance plans you can apply for yourself.
Take Charge of Your Finances
As much as possible, rely on yourself to handle your finances. While it is okay to ask for advice from trusted friends and family, you should be well-learned about personal finance and never rely on hearsay or anecdotes.
Read books from experts on the subject, watch videos from trusted professionals, and applying what you learn to your everyday spending. Don’t let others have too much control over your finances.
Of course, reading this article is proof of your willingness, so just apply that to other learning materials. Knowing how to manage your finances is key to supplementing the rest of the advice given to you here.
Budgeting is one of the best skills you can learn after becoming financially independent. Organizing your income into specific functions can help you save money by a significant amount.
A good practice would be spending one month recording all your expenses, then at the end of the month, ranking each expense by how much you dedicate towards it. By doing this, you have a much better grasp of where your money is going and how you can best budget it.
Budgeting is much easier now than it’s ever been before. With apps, you can even do all your budgeting from your phone, so there’s no need to hunch over a ledger. Budgeting is about consistency in adhering to the rules you set for yourself.
Pay Your Taxes
Depending on where you are from, taxes can be one of the trickiest things you’ll have to deal with. If you are in a place where taxes are something you have to worry about, then you need to learn the ins and outs of how to pay for them in a timely and efficient manner.
Thankfully, there are several resources online where you can learn about taxes, and there is even software that can streamline the more complex parts of taxation.
Taxes are often one of the most difficult things for young professionals to deal with. Make sure to check if your job offers any assistance with taxes and how reliable they are.
About the author: Sophia Young recently quit a non-writing job to finally be able to tell stories and paint the world through her words. She loves talking about fashion and weddings and travel, but she can also easily kick ass with a thousand-word article about the latest marketing and business trends, finance-related topics, and can probably even whip up a nice heart-warming article about family life. She can totally go from fashion guru to your friendly neighborhood cat lady with mean budgeting skills and home tips real quick.
Related posts you might enjoy:
INVESTING FOR BEGINNERS FOR FITTER FINANCES
12 GOOD MONEY HABITS TO START IN YOUR TWENTIES
7 LIFE-CHANGING FINANCIAL EDUCATION BOOKS
20 CREATIVE WAYS TO SAVE MONEY YOU WILL LOVE
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