Be Money-smart

By Jeanelle D. Horcasitas

January 15, 2016 5 min read

My parents ingrained in me the value of earning my own money and being financially stable from an early age. By the age of 10, I knew how to budget, save and balance a checkbook -- thanks to my mom, who is an accountant. However, as I've grown into an adult, I have gained my own money-smart tips and try my best to ingrain these valuable lessons into my younger brothers. So, here are a few simple tips to share with the young adults in your life, encouraging them to make smart decisions about their hard-earned cash for years to come.

*Create a Monthly Budget, and Pay Your Bills on Time

It may sound like a no-brainer, but when you are young and finally get your hands on more cash, it can be tempting to blow it all on one fun weekend. However, creating a budget can help solve this problem and ensure that you save for fun times in the present and secure your future, as well. Keeping track of all your expenses helps to conceptualize what you're bringing in and where everything is going every month. I recommend using Google Sheets because it can be accessed on any smartphone or computer, which makes it easier to share with others, in case you have to split payments with a roommate. Additionally, there are numerous apps that can be downloaded to help you create a budget -- for example, the one by Moreover, I recommend adding alerts to your calendar for upcoming payment due dates to help you avoid falling into the black hole of late fees.

Once you get your paycheck, refer to your budget and make sure that everything gets paid off immediately. Then you'll be able to see what is left over for yourself. However, being smart with the money that's left is just as crucial.

*Save, Save, Save

Despite how your money might dwindle after you pay off all your bills, you should be proud of the young and responsible adult that you are! But you can bring it up a notch by putting your money into a savings account to ensure a stable financial future for yourself. Therefore, add a section to your budget for savings, because yes, it's just as important as paying off your bills. In fact, Forbes states that the percentage of income you should be saving is contingent on when you are thinking about retiring. For example, a 25-year-old "wanting to retire in 20 years and assuming a rate of return of 7 percent, will need to save 35 percent of his income." This may not be feasible for everyone, but every little bit counts -- even if it's just $50 put away each paycheck. Thinking so far in the future is a bit hard to do when you're young -- but your older self will be grateful. Remember to keep in mind that there are other money-smart tips that could affect your future, as well, particularly when it comes to credit cards and loans.

*Pay Them Back ASAP -- Credit Cards and Loans

When it comes to credit cards and loans, always proceed with caution. Although it may feel as if credit cards come with a limitless credit line, limit yourself. Only use a credit card if you know you can afford to pay it off. According to NerdWallet, the average American household carries $15,355 of credit card debt. Therefore, it is crucial that you always buy what you need, not what you want. Additionally, spending within your means is extremely important to avoid a huge financial problem, such as bankruptcy or repossession. That said, credit cards are helpful for building your credit, which gives you credibility when it comes to making a bigger purchase, such as buying a car or a home. Nowadays, credit cards offer points for actual cash, which is a great way to funnel the money you spent back into the bank.

Loans, on the other hand, are usually more long-term, especially student, car and mortgage loans. According to NerdWallet, American households average $165,892 in mortgage loans, $26,530 in auto loans and $47,712 in student loans. Therefore, when it comes to loans, always try to get the lowest interest rate possible, especially when it is something that you will be paying off for many years. However, if you can avoid taking out loans altogether, definitely opt for this debt-free route.

Overall, there are plenty of money experts out there who can provide even more financial advice, but you are ultimately the one in control of how you want to manage your money. Thus, be smart with your cash and establish a financially stable future right now.

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