Being able to handle your finances is an important skill you should know to plan for your future and provide security. Getting a handle on your finances can be done at any age, but it’s best to start young as you have more time to save and more leeway to come back from setbacks.
Unfortunately, many US citizens are struggling with their finances. Statistics show that two-thirds of Americans would struggle to come up with $1,000 for an emergency. It is a very unstable situation that can potentially lead to a personal financial crisis if something were to go wrong.
Planning your finances early in life is very beneficial, and I encourage young people to start now.
Here are 3 ways you can take charge of your finances at a young age.
Insurance gives you a safety net and protects you financially from unexpected events. There are many types of insurance, from life insurance to car insurance, and you need to do some research to decide which policies you need. Don’t be afraid to shop around, as many companies offer free quotes. While this investment may seem like an unnecessary expense, especially for young adults, you will be very thankful it is there when you need it.
If you are a car owner, it is essential to have car insurance and be aware of the factors that may affect your insurance policy as a young adult. It is important to get car insurance because you can never tell when an accident will occur, and if you get into one, they will shoulder part or all of the cost.
Another common type of insurance is life insurance. Most young people don’t think about getting this type of insurance in their 20’s, but it is actually best to get it early. The premiums of these policies for young adults can be as low as $15-$18 a month. If you wait to buy coverage, this can increase by 8%-10% a year. This may not be at the forefront of your mind now, but in the future, you will be grateful to your younger self for getting it sooner.
Start your Retirement Fund
Another thing young people tend not to consider is a retirement fund because they feel that retirement is a long way off. Yet, a common issue those in this country face is not saving enough funds for their retirement. Too often, people start seriously thinking of retirement when they are less than 20 years out. Statistics show that if you start saving at 22, you will have earned more than double what you would have saved if you started at 32.
Retirement funds all depend on how much you plan to set aside and for how long you are planning to work. If you want to retire at an earlier age, it is ideal to put a large percentage of your salary into a high-interest account. This will allow you to accumulate more into your savings over time and will help build your retirement fund faster.
Hire a Financial Advisor
Young people are often left confused and overwhelmed by financial responsibility. It’s not like they’re taught good financial habits in school. One way you can solve this is by talking to a professional. Financial advisors are there to guide you on how to properly manage your finances. Don’t make the mistake of thinking that advisors won’t be interested in helping you. Some financial advisors specialize in providing guidance to young people and are very affordable.
It isn’t hard to find a good financial advisor that you can see eye-to-eye with either. Today, the opportunities to become an accountant are much wider due to universities offering online courses in the field. If your financial advisor has an online qualification rather than a traditional degree, don’t worry. Those who take an online accounting master’s degree qualify for the certified public accountant exam, just as those who take an on-campus course do. The benefit of more accountants being able to learn online is that it has created a much broader pool of advisors to choose from, and you are likely to find one that matches your budget and needs.
There are many ways young people can prepare for the future. Invest in yourself, and you will be rewarded for it when the time comes. Planning your finances is important because if you do it wisely, you won’t have anything to worry about later on.
Article Courtesy of Ramona Jeanna