Personal Finance Tips For Young People
We understand that personal finance may not be too much of a concern right now as you want to spend every dollar you may have in your pocket. But trust us, this information is valuable and we hope that you take it seriously to ensure that your personal financial future is healthy.
Learn self- control. This is a tough one when you are young and don’t have major expenses, like a home mortgage, to be concerned with. But we encourage you that the sooner you learn the art of delaying immediate gratification, the sooner you will learn how to keep your finances in order. Remember, cash is always better than using a credit card. If and when you use a credit card, it is advised to always pay off the full balance as soon as the bill comes due.
Start an emergency fund by paying yourself first. No matter how low your salary may seem at the moment or how huge your student loans are, it is important to get into the habit of putting a portion of your income into an emergency fund each and every month. These monies should be put into a saving account that will offer the highest interest rates (such as a money market account or a certificate of deposit).
Start saving for retirement now because the sooner you plan for retirement, the less principal you will have to lay out and the sooner you can say that working is an option rather than a necessity. Company sponsored retirement plans, such as 401(k) s, are an excellent choice. For instance, if you save $200 a month (beginning at age 25) with a 7% annual interest rate, then by the time you turn 65; you will have more than $500,000. If you begin this same savings, at age 35, then you will have half saved.
Safeguard your wealth by taking steps to protect your investments. For instance, if you rent an apartment, it is strongly advised to get insurance to protect the contents of your personal property from fire or theft. Disability insurance is another great investment because if you become unable to work due to an injury or illness, it will provide you with a steady flow of income. In addition, it is easy to safeguard your money from the tax man by using retirement accounts, investing in CDs, money markets, bond, stocks and mutual funds.