Young adults make many financial mistakes that they regret after reaching adulthood. Are you one? You probably did max out that credit card that your parents warned against. You may also have bought those designer shoes that you couldn’t afford, but wanted to be part of the crowd. You are not alone. Many young people have no clue when it comes to their finances, but you can change that by getting a head start or changing what was a rocky start for you. Below, you will find some financial guidelines that young people like you can adapt to.
Credit Card Debt
As a young adult, it is important for you to stay as far away from credit card debt as you can. This kind of debt can be long term, if you don’t yet know how to be financially savvy. Make sure you have money in your bank account prior to charging something on your debit card. Many credit cards carry high interest rates, especially for young people. Avoid them at all cost.
If you are entering college, you will be offered various options to pay for your tuition. If you don’t qualify for financial aid or don’t have a scholarship, you have the option to choose an education loan from a financial institution. While, you are allowed to borrow a certain amount, don’t accept the amount just because it is offered. Borrow only what you need and nothing more. After you leave college, you will have to pay back that loan and you don’t want to spend the rest of your life doing so. Student loans can be a financial sore in your back, but you can take control now so that when you graduate, you can breathe easier.
Check Your Borrowing Skills
As a young person, you will probably see that nice car that you want, but be careful. You don’t need a Lamborghini at your age. Be modest about the kind of vehicle you choose. Don’t go overboard to impress your friends. You will be caught with a huge bill and no one to help you pay it.
Always pay attention to the state of your credit. Pull credit reports at least once each year to see your FICO score, credit rating and credit history. Later on in life, these will be helpful and instrumental in buying a home, so you want to make sure that you have good credit. If you use credit to purchase anything, make sure you pay on time and pay more than the minimum amount. Don’t use the entire balance on your credit card because it is available. Lenders see that as financially irresponsible.
Checking and Savings Account
Don’t wait for your parents to open your checking and savings account. While it is recommended that you include at least one parent as joint account holder, you should take the initiative in wanting to save from a bank account. Did you also know that you can open up a retirement account when you are in your 20s? Yes, you can and the sooner the better. However, many young people don’t think like that. Instead, they believe a retirement account is for old folks. Wrong!