Lessons in Financial Adulting
BIG Ideas:
- Having a budget can help ensure you have the money you need to reach your goals and pay your bills.
- Saving for emergencies, short and long-term goals and paying your bills on time are keys to financial independence.
- Regularly review your finances to assess your savings, debt, and goals, and measure your progress.
You made a huge step in your life – and your financial future – with your college education. Now, you’re ready for the next step – full-scale adulting! It’s that liberating time when you can make your own decisions, control your schedule, and stay up as late as you want!
It’s also a time for you to start taking charge of your money by managing a budget, saving for goals, and managing credit.
Okay, that part can be a little scary.
But in reality, financial adulting isn’t all that hard if you follow a plan. Here are some financial lessons to help you take control of your money today – and throughout your life:
1. Budget. Whether you’re in school, just starting your career, or nearing retirement, you must master the skill of budgeting.
Having a budget will help ensure you always have the money you need to pay your bills. It can also help you sleep better at night. For guidance on getting budget-ready, check out Budgeting 101.
2. Save. One of the biggest keys to financial freedom is having savings. Establishing an emergency fund can help you prepare for unexpected expenses like medical bills or car repairs.
You can also set aside savings for your short-term goals like vacations or an apartment rental. Get in the habit of saving by arranging to have money from your paycheck directly deposited to a savings account each pay period.
3. Pay your bills. Always pay your bills on time, which is super important in building good credit. To make paying bills easier, have your payments automatically deducted from your account each month.
4. Avoid credit card debt. Credit cards make it so easy to buy the things you want – and often can’t afford. Use credit cards wisely and pay off your balances in full every month. If you already have credit card debt, make paying it off a priority. Start by paying off high-interest balances first.
5. Invest. If you have long-term goals, investing in stocks, bonds, mutual funds, or even real estate can help you earn greater returns that can help you build wealth.
Investments like these do come with risks, so, before you invest any money, talk to a trusted and experienced financial advisor or planner.
6. Get insurance. Insurance isn’t particularly fun or exciting, but it does provide valuable protection if you need it. When you enter the real world, make sure you have sufficient health, auto, and even renter’s insurance coverage.
7. Plan for your retirement. Wait, what? How can you think about retirement when you’re just starting out? The truth is that now when you’re young is the best time to start planning and saving for retirement.
With the power of compounding interest (link to new retirement article), the interest you make on your savings will accumulate along with the money you contribute. So, if you get a job after school, enroll in your company’s retirement plan as soon as you can.
8. Make estate plans. Okay, you may not be ready for this right after college, but if you get married or have children, it’s wise to create an estate plan, including a will, that will ensure your assets and loved ones are protected if something were to happen to you.
9. Collaborate with your partner. When you marry, make sure you and your partner establish joint financial goals and coordinate your savings and spending to work toward them.
10. Know where your money stands. The key to managing money successfully is making it a priority. Regularly review your savings, debt, and goals to see where you stand. Make adjustments as needed.
Also, try to boost your knowledge by understanding financial topics, like saving/investing, retirement planning, and tax strategies, so that you can make the right decisions to take your life where you want to go.
If you follow these smart financial lessons, you’ll be closer to your goals, reduce money stress, and most importantly, crush Financial Adulting 101.
Brazos is here to help you on your financial journey!
For more than 40 years, Brazos Higher Education has been helping students with the education and refinance loans they need for a brighter future. As a non-profit, we can offer you low rates that fit your budget. Contact us today!