Growing up, most people are taught survival skills like house chores and cooking. But one basic skill that most people are not taught is how to manage money properly. While this may seem like a complex topic, it is the foundation of everyone’s daily life. From paying rent, saving, and buying books, money is woven into most things that people do. That is why financial literacy should not be taken lightly among young adults. Here are some tips from Kevin Cohee that can help young adults learn how to manage their finances better.
Understand Your Expenses
If you are like most people, then shopping for anything, whether clothes, gadgets, house décor, or shoes, makes you happy. You see something on sale, and you immediately want to get it. But how often do you consider how that expense fits into your budget? The sooner you learn some self-control when it comes to purchases, the easier you will find it to keep your finances in order. Once you start making money, take stock of your expenses, income, or even debt. Compare your expenses with the money you are making. This will give you a clear picture of your spending power, how much money you can save, and the things you cannot afford.
Don’t Wait to Save and Invest
Most people wait till they start earning a lot of money to save up. Understandably, with limited cash, every penny counts. However, as financial experts like Kevin Cohee suggest, saving a few dollars every week will go a long way. When it comes to investing, ensure that you are contributing to a 401k account. When you are in your early twenties, the amount you save is not as important as the act of saving. So do not worry so much about what you are contributing. You are simply building a foundation for good saving habits that will come in handy in the long run.
Have a Budget
Once you start earning, you need to figure out how to budget for money. There are bills that need to be paid, weekly expenses like gas and food, and an emergency fund to establish. One of the advantages of budgeting is that it allows you to prioritize expenses. It gives you an idea of how you will use your income. Plus, without a budget, you may be spending more than you are earning or wasting money.
Have a Debt Repayment Plan
Debt is a reality for many young adults. When you start earning, you already have student loans to repay. Then there are credit card loans and possibly car loans and mortgages. While these things are part of life, it is wise to have a debt repayment plan in place and stick to it. If you have student loans, check whether you are eligible for a loan forgiveness plan. For things like personal loans or credit card debt, do not allow it to spiral out of control.
Kevin Cohee knows that trying to manage money is not something you just do in one day. It is a continuous process with trial and error till you get it right. Even in your 50s, you might not get one thing right. The important thing is that you are intentional with your financial plans.