With age comes responsibility, so if you're a young adult in your 20s or 30s, chances are you've been introduced to the realities of adulthood.
While you're excited by all the opportunities life has to offer, you're also aware of your emerging financial responsibility. In the financial realm, the millennial generation (young adults born between 1981 and 1997) faces a unique set of challenges, including a competitive job market and significant student loan debt that can make it difficult to obtain financial stability.
Poor money management can lead to debt, stress, and dependency on others. Fortunately, good money management skills can make it easier for you to accomplish your personal goals. Become familiar with the basics of planning now, and your future self will thank you for being responsible.
Figure out your financial goals
Once you have a clear picture of your goals, you can establish a budget that will help you target them.
Build a budget
Identify your current monthly income and expenses (include entertainment, travel, hobbies, housing, food, transportation, utilities)
Establish an emergency fund
It's an unpleasant thought, but a financial crisis could strike when you least expect it, so you'll want to be prepared.
Be careful with credit cards
Credit cards can be useful in helping you monitor how much you spend, but they can also lead you to spend more than you can afford. Before accepting a credit card offer, evaluate it carefully by doing the following:
Always remember that missed payments of any sort can cause your credit score to suffer.
Deal with your existing debt
A 2015 Pew Research study revealed that 86% of millennials have debt. (Source: "The Complex Story of American Debt," July 2015) In particular, you might be concerned about how to pay off your student loan debt. Here's a few ideas to deal with debt:
Beware of new borrowing
Think carefully before you borrow more money. Ask yourself the following questions before you do:
Take advantage of technology
Access to technology at a young age is one major advantage that benefits millennials, compared with their parents and grandparents when starting out. There's an app or program for everything including financial basics.
These are just a few of the financial basics to get started, consider working with a financial professional for a more personalized strategy.
Thom Haarmann, J.D. is the Manager of Finaical Services for Money Concepts at CFC.
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