10 Must-Know FinanceTips for Youngters
This article is aimed at teenagers, if you are an adult then please refer it to a teenager as well. Teenagers are the perfect time to start planning for your future. Many however focus only on their education and career. Which without any doubt is important but another equally important aspect of planning for the future is planning for your retirement.
Some may say that the young age of 18 is just too early to worry about retirement. But this is not true. When we say retirement, we mean financial independence! 18 is exactly the right time to start preparing for the journey to become financially independent. You do not have to wait till your retirement to become independent.
Unfortunately, a lot of teenagers are never educated about financial independence or personal financial management. This is why we are now seeing an increasing number of people in their thirties and forties, being heavily indebted.
If you’re one of the millions of young people who are entering adulthood with limited financial literacy, there are plenty of things you can do to get a better handle on your finances.
1. If You Can, Start Saving and Investing Early
If you can, start saving and investing early in your life. You’ll get the most growth out of your money. Even if you are not able to save or invest, there are things you can do to get a head start. Make a goal to save a certain amount each month. Whether it’s $10, $20, or $50, every little bit helps. What is more important at this stage is to get into the habit of saving.
Even if you can only save $10, do it because it will rewire your brain to save first and spend later. Which is going to come useful later on in life.
Also See: 10 Fool-Proof Ways To Save Money
2. Put as Much as You Can in Your Savings
There’s no time like the present to start putting as much as you can into your savings. This is going to prepare you for your contributions to your retirement fund when you start earning a regular income.
Take out time to learn about individual retirement accounts, ask elders or career counsellors. Prepare early to choose the right retirement account, so that you can start saving early for retirement.
3. Don’t Be Afraid to Take Risks
There is no better investment than the risk you take on your own behalf. Risk-taking can be as simple as investing in a new business or as complex as getting into the stock market. The key is to be aware of your risks, and understand how to manage them.
At an early age, you will have less to lose and a lot to gain. So try to take more risks when you are young. Try out that startup idea you had or invest your savings into that stock that everyone thinks is going to make a lot of money or invest into Doge till it crosses the dollar mark.
A lot of successful entrepreneurs say that they wish they could have taken more risks when they were younger when they had little responsibilities. Your risks may not pay off, in which case the failure will teach you a valuable lesson. But there is also a possibility that your risks may pay off. You are not going to know this unless you try and take risks.
4. Don’t Keep a Lot of Cash on Hand
If you don’t need it, don’t keep it. If you are putting money into a savings account, don’t keep a lot of cash in hand. Whatever excess savings you have, put them into the savings account or better, invest them.
5. Look for Ways to Save More
One way to save more is to cut back on your expenses. You can find ways to do this for just about anything you spend money on. Don’t buy coffee from a vending machine. If you don’t need it, don’t buy it.
Teenagers are once again the best time to save. You can save almost all of your income as compared to later years when you will have a ton of financial responsibilities.
6. Don’t Let Credit Cards Bring You Down
It is a fact of life that credit cards can help you pay for things you need and want. But if you carry too much debt, your credit score will suffer. It will take longer to pay off the debt, and you’ll pay more interest. It is best to pay off your credit card balance every month.
7. Invest as much as you can
You need to understand that if you want to create wealth in your lifetime, then you will need to adopt the rule of incremental investments. Investing whatever you save is not good enough. Instead each month you must invest increasingly more than the last month.
Also See: Different Ways to Earn Money Online
8. Be Careful What You Spend Money On
Money is meant to be spent. It is meant to be spent on experiences, on things you like, on things you want. Make sure you spend your money wisely.
In order to make the most of your money and take advantage of the money you have saved, you have to be careful of where you spend it. It’s a lot easier to save money than it is to make it. The first step is to learn to spend less than you earn.
If you want to make the most of your money and the savings you have built up, there are several things you can do to make sure you make the most of your money.
9. Diversify your skill base
At this young age, you can focus on diversifying your skill base. Learn some extra skills so that you can create passive income streams. Never rely solely on your active income stream, instead create as many passive income streams as possible so that even if you lose your job, you will at least have a fallback plan and unemployment won`t hurt that much.
10. Plan Plan Plan
There is no secret to living a financially independent life. It only depends on how good you are at making plans and then executing them effectively. Make both long and short term plans in your life and review them regularly. If your long term plan is to save up $3 million for retirement, then break it down to 5-year targets, further break it down to annual and then monthly targets.
If you find it difficult to plan then seek the help of a financial manager. But make sure that you have got your plans for what you want to do with life. The teenage is a perfect time to supercharge yourself for adult life. The right guidance can save a lot of time and thus reduce the amount of work that you may have to do later to make things right.
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