Money Tips for Young Adults
But before you get too carried away, here are a few of my favourite tips from other financial experts published in a recent Wall St Journal article. This advice can set you up for money success and change your life forever.
Pay Down Debt & Build Emergency Savings
Both of these things will help you reduce stress and sleep better at night! Having no debt and money in the bank gives you flexibility and choice to deal with life’s unexpected expenses. So, when you’re invited to your cousin’s destination wedding, maybe you can actually go.
Know What Healthy Spending/Savings Looks Like
Images from the media like a celebrity lounging on the beach at his $20 million vacation home is NOT reality, so ignore it. An interesting rule of thumb to keep in mind is 50/30/20 – 50% of your take-home pay goes to needs, 30% to wants & 20% to savings (source: “All Your Worth: The Ultimate Lifetime Money Plan” by Elizabeth Warren). Don’t get too hung up on the numbers…what matters most is the message that savings must be a priority, even if the amount is small. The power of compounding your savings over many years can mean an exponential increase in your future wealth.
Don’t Expect To Live Like Mom & Dad Anytime Soon
It took many years, hard work and possibly some luck to get to where your parents are today. Expect the same.
Your Income Must Rise Faster Than Your Lifestyle
This is the only way to build real wealth. By all means, enjoy some of your money today, just not all of it. Be especially careful of making large,”permanent” rather than “temporary” increases in your spending. Permanent increases like buying a bigger house or more expensive car set you up for higher monthly spending for many years to come.
Pay Attention To Your Human Capital
Your ability to earn income is one of your most important assets. Education, training, skills and experience keep you marketable and build your lifetime earnings potential.
The best news when you are young, is that you have time on your side. Start these habits today and they can make a world of difference to your financial future!
If you’re hungry for more knowledge, here’s the link to the full article. Enjoy! http://online.wsj.com/article/SB10001424127887324474004578442682818178530.html?KEYWORDS=The+Experts%3A++The+Best+Financial+Advice+For+Young+People+Starting+Out