Strength in Numbers: Financial Tips for Young Adults
Financial Tips for Living on Your Own
Adapted from the Federal Deposit Insurance Corporation (FDIC) Consumer News, Spring 2008 Issue. Available here.
Financial strength is extremely important. It allows us to focus on our interests, attend school, go out with friends, and keep the roof over our heads. For good or for bad, money matters and it is often needed to maintain many aspects of our lives. Not having enough or getting into serious financial trouble can cause a significant amount of stress and can prevent you from accomplishing your dreams.
Here are a few simple tips to help ensure you get the most “bang for your buck”:
Start Saving your Money Today:
- Make it a goal to put 10% or more of all money you receive into a savings or investment account. Whether it is money from holidays, birthday parties, or special occasions, any amount will help.
- Turn your saving into a habit. Small sums of money will turn into large amounts before you know it. One day you may be able to save up for a car or even a house.
- Keep in mind that emergencies do occur, so think ahead. You never know when you will need this money!
- Even if you are young, it is smart to start saving for retirement. To make things easy and painless, consider asking your bank or employer to automatically transfer a certain amount of your paycheck money each month to your account.
- Loose change can become your best friend. Every day, put your change into a jar and then bring it to a local Coinstar to see how much you have. Then deposit your money into your savings account.
Keep Track of your Spending:
- Create a spending plan and determine how much you will need to spend on essential expenses first, such as housing, food, bills, and medical needs.
- Use coupons! They are quick, easy and can save you lots of money on groceries, necessities, and anything you can imagine.
- Bargain shopping at places like the Salvation Army and your local flea market will also help you with saving money and finding everything you need at a great price.
- Keep a list of your expenses so you have a better idea of where your money is going every month.
- If you need help creating a budget, download the Sample Budget Download Sheet available on the On Our Own resource group. Also, look at these tools to save more money.
Review your Finances Regularly:
- Check your bank account balances regularly to avoid withdrawing or writing a check for more money than you have in your account. This can trigger hefty fees.
- Closely monitor your account balance with online banking to ensure there are no errors, unauthorized charges, or indicators of identity theft.
- Review your bills and bank statements as soon as they arrive.
- Keep copies of any contracts or other documents that pertain to your bank account, so you can refer to them in a dispute. If you spot a problem, contact your bank immediately or visit a local branch to fix the problem.
Think Before you buy:
- Ask yourself if you really need the item before buying it.
- Refrain from being impulsive and take at least a couple of days to think about purchasing it. You do not want to regret spending a lot of money on a whim.
- To control costly spending habits or impulse buys, set aside a small amount of cash every month that you have budgeted for splurging. Assure that this money does not inhibit you from paying your bills or buying groceries! It should be extra.
- Do not use your credit card for impulse shopping. If you cannot pay your credit card bill by the due date, the interest can add up. You may end up paying off your purchases for years to come.
Be Careful with Choosing your Cards:
- Try getting a debit card rather than a credit card. Debit cards automatically deduct the money you spend from your checking or savings accounts. This eliminates the hassle associated with interest and debt because you can only spend what you have!
- If you do have credit cards, limit the amount you have. It is much easier to pay off one card rather than paying off five.
- If you have multiple credit cards with various debts, pay off the highest interest-rate credit cards first and as soon as possible.
- Avoid choosing a credit card just to get freebies like T-shirts or sports items. Instead, look for a card that is best for you based on your borrowing habits.
- Pay attention to the interest rates associated with your credit card. Choose a card with low interest rates and a large grace period.
Build a Great Credit Record:
- Be aware that every time you swipe your credit card and pay your bills, you are building a credit history.
- Credit reports and credit summaries reflect your ability to pay off your credit card debt. Take time to frequently check these out and ensure you that you are in good standing. Use the Equifax, Experian, or TransUnion to ensure that their information reflects your payment history.
- Remember that employers, insurance companies, and landlords check credit scores.
- Always pay your bills on time.
- If you ever find yourself in serious debt and unable to pay off your loans, credit cards or bills on time, visit the Federal Trade Commission (FTC) Web site to learn about how to get out of debt safely or to find a reputable credit counselor who can help you.
Protect yourself from Scams and Identity Theft:
- Never give out your name, address and Social Security number to a person or a website that you do not know and trust.
- Be suspicious of any requests for personal information.
- Be aware that identity theft is common, and get your identity and personal information protected as soon as possible.
- Identity theft can occur in many different ways. Avoid sharing information in emails or in response to Internet advertisements, no matter how legitimate they may seem. Fraudulent requests can also come by phone, text message, or mail.
- If you believe you are a victim of identity theft, contact the Federal Trade Commission or call 1-877-ID THEFT (877-438-4338).
- To report crimes relating to identity theft, contact your local FBI office.
Choose the Right Education:
- Consider where you plan on receiving your education from. Community colleges and state universities are notably cheaper than private institutions.
- Learn about your options for saving or borrowing money. Apply for scholarships, buy used books, and look for affordable housing.
- Seriously consider the institution that provides you with the most financial aid. High college debt can follow you throughout your life.
- Apply for grants and take out student loans.
Consider the Best Way to pay for a Car:
- Determine whether or not you really need a car.
- Consider the public transportation in your area that can get you to where you need to go. This can save you a lot of money.
- Question whether or not to buy or lease your car if you decide to go through with your purchase.
Buying a Home or Renting an Apartment:
- Find an affordable real estate agent to help you out with the process. This will save you time and money.
- Consider the area you are looking in, how long you plan to live there, and how much money you have for a down payment.
- If you are currently struggling to pay your rent, look at these tips and really think about whether you are ready to buy a home.
Invest in Insurance:
- Remember that unexpected accidents do occur, so it is better to be safe than sorry.
- Consider all forms of insurance and choose what is best for you.
- Check into low-cost or free insurance options offered through your employer or college.
Try out some Free Activities:
- You do not need to spend money to have fun. Get together with your friends, family, or coworkers to hang out and watch a movie, go hiking, visit a national monument or historical site, play a board game, or even volunteer!
- Use Groupons to pay less for something exciting to do this weekend.
Remember to stay positive and remember that you can do this.