Looking for some ways to prepare for financial adulthood? For those of us who are lucky enough to grow up in a strong, stable family environment, the prospect and idea of having to handle real financial responsibilities and problems doesn’t become a reality until you reach adulthood. You might have your first flirtings with savings thanks to a weekend during school, and you will probably work out how to budget when living as a student at college, but it’s safe to say that the full burden of financial responsibility doesn’t come into effect until you are graduated from education and are enjoying a full-time career. This can sneak up on you much faster than you think, so here are some ways to prepare for financial adulthood.
1. Set Priorities
This is one of the best ways to prepare for financial adulthood. Even you start a great job with a decent opening salary, it is important to put together some financial priorities that always remain at the top of your list. This includes things like $500 saved away for emergencies, contributing to your employer’s 401(k) scheme to at least the minimum amount, and always paying off your high-interest debts first like credit cards.
2. Budget Strategy
Make the effort to identify your current post-tax income, and then put into place the 50/30/20 budgeting system. This means spending 50% on necessities like food and rent, 20% on debt payments and savings and then 30% for luxuries like visits to restaurants, travel and entertainment.
3. Learn about Credit
Make sure that you are all clued up on how credit works before you sign up for a bunch of loans. You need a good credit score, and this involves doing things like always making your payments on time and using less than about 30% of your available credit whenever possible. So if you have a card with a limit of $3,000, you should only ever aim to spend around $1,000 if you want to keep a good credit score.
4. Money Multitasking
You can so something called a credit-builder loan which will help you to establish credit and save some money at the same time. You can apply for these through credit unions and community banks, and they are usually easier to pay off, so you will be able to do so and get positive credit history in return.
5. Invest Early
Starting thinking about your future as early as possible by investing whatever you have. For example, at typical rates, if you invest $1,000 at age 22, it will have turned in to $20,000 by the time you are 72. The earlier you start to think about your circumstances in your old age, the more financially comfortable you will end up being by the time retirement comes around the corner.