It has become a world where you can have your first credit card approved at the age of 18 and where going into debt to afford college is considered standard practice. It has also become almost imperative to start learning more about financial management to handle your money even before you reach these milestones. You can even begin taking out a home loan or buying a car to ensure that you are not only living within your means but laying the groundwork for a stable future. Here’s how any young adult can get off to an early start in managing their finances.
Start tracking expenses
Growing up in the average family, you can expect kids to have marginal involvement in the financial aspect of day-to-day living. Yet we are all expected to become independent and responsible adults. It only makes sense for young adults in the household to become increasingly involved in essential tasks, such as maintaining a budget that works.
Find an entry-level task, such as creating a list of personal expenses, which you can delegate to a teenager. Have them identify which costs are wants versus needs and compare the total with their regular allowance. Set reasonable challenges, starting with breaking even and moving on to saving 5% each month and more beyond that. This way, the skill of financial management is broken down into a manageable task that can become part of their routine, preparing them for full independence and running an entire household budget later on.
Hustle and save
Due to financial difficulties, some teens may find it necessary to hustle and start earning to get by. Others, however, simply don’t have to worry about where the money comes from. Understandably, parents who have the means to do so would want their children to enjoy their early years and not worry about making money.
Still, most young adults could benefit from an increased awareness of income generation—what it takes to make money, how to save, and how to invest those savings wisely. That can start with a simple skill, such as baking, which provides opportunities to teach about selling through basic networking and marketing tasks and opening a savings account with the proceeds. The goal isn’t to create a child entrepreneur but to train them in best practices for identifying revenue-generating opportunities.
Evaluate education plans and career prospects
Most of us put our kids through school to secure a better future for them, but recent times have shown us that the job market is extremely competitive, and the cost of quality education is rising. As a result, student debt is ballooning in the US. Over two-thirds of the class of 2019 had an average debt of $29,900 upon graduation. Due to competition, not all of them are guaranteed to immediately land the job they want or any job for that matter.
It’s vital to teach young adults that education is a strategic investment and must be aligned with their career prospects. A few students can afford to shift courses or continue into higher education if they have decided to pursue a career with limited earning opportunities.
Young adults will grow up and start handling essential responsibilities sooner than we often realize. Using these methods, you can help any teenager to be better prepared and have a solid foundation of good practices when it comes to financial management.