Many of us learn the most important lessons when it’s too late. We also miss some opportunities and make unnecessary financial mistakes by not knowing what our options are. Due to this, it’s important to help those around us, especially our children and young adults, as they learn the importance of finances.
An extremely important lesson to share with the young adult in your life: investing early yields huge benefits. To encourage them and to demonstrate investing’s importance, look at a chart of the compound returns over the course of a decade. Try to convey that while you can start in your 30’s, starting in your early to mid 20’s is beneficial if you make wise investment choices.
Think About Your Career
Ideally, what do you want to do? How far in your education do you need to go to accomplish that? Is there a certain salary you would like to receive? These are all useful questions to get the young person in your life to start thinking about. Many times, we settle for short-term moves or a simple job. While these positions can be preferable for the time being, they may end up hurting you in the long run.
Learn Basic Budgeting
Many adults enter adulthood without a basic budgeting skillset. To help the young person in your life be prepared for when they manage their own money, it’s important to give them the necessary tools. Set up a bank account, teach them the basics of a monthly income and expenses, and tackle things like emergency funds, investments and planning for future expenses.
Avoid Financial Blunders
There are a few common financial missteps that we all commonly make, and it’s important to teach the young adult in your life to avoid them. Blunders like missing payments, amassing credit card debt and making poor investment decisions can be quite costly due to interest and penalties. By showing them the long-term consequences of these short-term decisions, they will hopefully be able to avoid them.
Earn Funds On the Side
Budgets can only remain strict for so long. At some point, the young adult in your life may need more money. Since jobs pay a fixed wage, many people seek out side gigs. This could mean tutoring, dog walking, performing as a musician, etc. It’s vital that you explain to young individuals that their hobbies or talents can be used to make money!
Now that you know how to budget as a young adult, you should also learn how to budget as a couple! Visit CashNetUSA — 7 Tips on Budgeting As a Couple