The following article is a guest post by Stacy Barbee.
How I wish money tricks were taught in schools. In our times, schools and colleges primarily focused on obtaining good grades at the end of the academic year. And, that trend is still going on.
The 2 fundamental aspects of an awesome financial life are:
(i) Making money
(ii) Managing money
In the last few years, I have interacted without countless people who are not happy with their financial life and have been compelled to enroll in debt reduction programs. And, after hearing their stories, I have come to only one conclusion – most people focus on money management when it is too late.
I feel people should start learning money tricks when they are young and bubbling with youthful energy. This would help them handle money matters carefully, avoid costly mistakes and save themselves from debt problems in future. So, here I am, with a list of tricks that every young adult can use to have a good financial life. I hope you’ll find these tricks useful.
1. Look at your future earnings and then borrow: Decide what kind of career you want to have after finishing higher studies. Calculate your expected first-year salary and then apply for a student loan. Make sure you don’t borrow an amount that is higher than your expected first-year income.
2. Create a budget plan and follow it: These days, you don’t need to be a financial pro to create a budget plan. Just download a good budgeting app and create a plan. This would help you accelerate your savings and dip your expenses.
3. Go above the minimum payment: You know why most young adults get into credit card debt trouble? It’s because they don’t pay full credit card bills. They pay just the minimum and allow the outstanding balance to increase every month.
A good trick is to pay more than the minimum amount. If you can afford, just double the minimum amount. At least, you would save on interest and shorten the repayment time.
4. Check three times before you buy: Check the price, consumer feedback, and features of any ‘big ticket’ product you’re going to buy. This would help you get the best product at a reasonable price.
5. Know everything about Obamacare: Health is wealth. Obamacare has popularized this statement even more. Buy a health insurance policy from the State’s health insurance marketplace. Get all the details on Obamacare from here.
6. Check your credit score: Credit score gives you an idea about your financial health. When your credit score is between 300 and 500, lenders would either disapprove your loan application or charge a very high interest on your loans. So, you have to focus on the ways to improve your credit score.
When your credit score is above 700, it means you’re on the right financial track. Your job would be to maintain this score by all possible means.
7. Make timely payments: Be it credit card bills or utility bills, always pay them on time. An awesome trick would be to pay the bills as soon they arrive. This will help you avoid extra fees and penalties. You can set text message alerts to remember all the dates.
8. Save for your retirement years: Now, you’re young and energetic. You can work for several hours and make money. But, situation would change after you retire. So, start building your nest egg with the help of the retirement savings plans – 401(k), IRA, Roth IRA, etc. It’s best to be financially prepared for the days when you would be weak and jobless.
One more trick
Focus on your tax. Have a talk with a tax planner to know which taxes are applicable to you. Know about the ways to maximize your tax refunds and avoid costly mistakes. Once you get an idea about how much you have to pay on your tax, start planning accordingly.
Some words of wisdom
It isn’t a Herculean task to be a perfect ‘money manager’ at a young age. Just use the tricks mentioned above. With a positive attitude towards money and determination to learn, you can manage finances like an expert.