It’s widely believed that financial intelligence is, for the most part, hereditary. Think about it: what they don’t teach you in school, you’re left to figure out on your own. Your parents or guardians are most likely your go-to resource, but if their own financial savvy is limited, yours likely will be, too. As humans, we learn by watching others. But we can also take advantage of the wealth of online resources to un-learn financial habits that will hold us back throughout life – or never pick up on them to begin with! 

You are never too young to learn the value of a dollar. Here are some of the best financial tips that young savers can start putting to good use:

Get Schooled on Personal Finance

You are in control of your financial future, and it pays (literally!) to start taking control early on in life. There’s a lot of bad financial advice out there, some of which is designed to rob you blind and some of which is well-meaning (aka advice from Grandma who lived during a time when families could survive on one income) but also ineffective.

The good news is that there is a lot of good financial advice available to you, too. Seek out financial experts and resources that can teach you what you need to know about personal finance. 

The bottom line: be proactive about mastering your finances. The more you learn about personal finances, the better you can maximize your income no matter how much money you make.  

Know What Life Costs

When you were in high school, you probably weren’t concerned with how much your parents paid in rent, car insurance, or healthcare. But these expenses are a necessary part of life, and they’re constantly increasing. 

Think about all of the things you use on a daily basis just to live: food, shelter, transportation, and clothes. Then there are things like personal care items, furniture, your cell phone, entertainment, and tons of miscellaneous expenses. Eventually, many of these things will need to be replenished or replaced. 

The sooner you start learning what life really costs, the better you can prepare yourself for reality. This might inform your career choice, where you live, whether you get married, whether you choose to have children, 

Make a Monthly Budget

The minute you get your first job (or ideally before), it’s wise to start making a monthly budget. A budget shows you what you can afford to spend each month on specific items without going into debt. 

To do this, start with your income (after taxes). Then make a list of all of your necessary expenses, such as rent, utilities, transportation, and food. Some of these items will vary from month to month. 

These things should add to less than your income, by the way. If it doesn’t, then you may need to consider living at home or getting a roommate to share expenses until you can afford to live on your own. 

Watch Where Your Money Goes

Mapping out your monthly expenses help you see exactly where your paycheck goes. You don’t want to guess how you’re spending your money. Knowing with confidence helps you find ways to adjust your spending if you incur a surprise bill or need to make room in your budget. This gives you more control over your money so you can decide how to best use it.

Weigh Every Purchase

What is the real cost of your purchases? No, I’m not talking about what the charge will look like on your credit card statement. I’m talking about the bottom-line cost and the sacrifices you might have to make in order to make that purchase.

For example, let’s say you want a new cellphone. You decide to charge it to a credit card that has an 18.9% APR. You make minimum monthly payments (let’s say $50), but that $800 cell phone will actually cost you closer to $1000 when it’s paid off because of interest. Not to mention, instead of paying $50 a month toward a new cellphone, you could be putting that extra money toward paying off student loans or other debt, or building an emergency fund, or any number of things that can help you “get ahead.”

Being able to afford something doesn’t mean it’s without financial consequences. Weighing your purchases to see what you might be missing out on if you do buy something can help you make smarter spending and saving decisions.

Build an Emergency Fund

There will never be a time in your life where you don’t need money. One of your first priorities as a young saver should be to start building an emergency fund. More than half of adults live paycheck to paycheck and are one or two disasters away from being homeless. Having that extra cushion can be the ticket to help you keep your job, your home, and your lifestyle. 

Stay Healthy

Exercise. Eat your vegetables. Take your vitamins. Maintain your health while you are still young. 

Medical debt is a silent and sudden financial killer. More than 17% of Americans have medical debt, and even just one accident or major procedure can be enough to wipe out your savings, even with health insurance. You can mitigate this potential for surprise medical needs when you can stay healthy to begin with.

Create a Debt Reduction Strategy

If you do incur debt early in life, make it a point to start paying it back as quickly as possible. Interest rates can prevent you from making a dent in repayment for years, so always pay more than the minimum when possible. 

Protect Your Assets

You work hard for the things you have, so make sure you work to protect them, too. Things like renter’s insurance might seem like an extra expense, but this ensures your belongings are protected in the event of a disaster. The same goes with disability insurance – you’re ensuring yourself in the event you can’t work. 

Ready to start taking control of your personal finances? Visit our free online community, CreditMakesSense.me for more guidance!

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