42% of Americans worry about having insufficient money to satisfy their daily needs. If only finance management were part of basic education, people would have better budgeting skills and make more progressive financial decisions. Since average Joes and Janes do not undergo training on how and where to invest money, many commit irreversible mistakes leading to severe losses.
Although money is not the only thing that matters, it is a crucial part of personal development. It is almost impossible for people nowadays to succeed in whatever endeavors without complete control of their finances. If you are a young adult still starting in life, it would be best for you to learn about personal finance at the earliest time possible.
Financial advice for young adults from experts
Financial literacy is the gateway to financial success. The sooner you learn about managing your financial life right, the better. But instead of following random Internet hacks on how to save money, listen first to what the experts say.
Here is a handful of financial tips for young adults quoted from some of the most successful business leaders of this generation:
1. Investments will take you far.
2022 Top Male Coach and CEO of Coach Foundation Sai Blackbyrn explained that “an individual’s ability to invest money wisely is crucial to their long-term financial security.” He told Skill Success that people should invest some of their earnings in profitable endeavors to build an emergency fund in case an unexpected setback happens. While everyone’s financial future is uncertain, investing is a progressive activity that trains people to spend money wisely.
2. Be keen on your everyday expenses.
If Tiffany Payne, the Head of Marketing at Replace Your Docs, could only share one of the most crucial money-saving tips to young adults, it would be to “keep a record of your financial savings.” Payne realized after working years in the financial industry that everyone should know exactly where their money goes. Being aware of expenditures and discovering how to make better financial decisions is the first step toward financial maturity.
3. Set up automatic payment programs.
Sealion’s Head of Marketing Dean Lee stands by “paying your usual expenses automatically.” This strategy helped Lee course through his financial life with lesser stress because he does not always think about due dates. After knowing the value of his typical expenses, like food, water, electricity bills, and subscription fees, he sets up his bank account with an automatic debit program. All that is left to think about are unexpected expenses and leisurely splurges.
4. No need to go all out at once.
Code Signing Store‘s eCommerce Strategy Lead, Michael Hess, advises young adults to “start small yet smart.” According to him, you can choose whatever type of investment speaks to you but always understand the groundwork of the system. After learning more about investing, you can start to diversify your portfolios and grow in several industries. He also adds that exploring low-risk, long-term mutual funds is wise because they are reliable and do not require much intervention.
5. Refrain from splurging too much.
Paul Somerville, the Editor-in-Chief at Electric Scooter Guide, shares a modest but virtuous reminder “to reduce wasteful and extravagant spending.” He is a believer that it does not matter how much you earn because costs quickly pile up, and the next time you know, bills are already beyond your budget. Sommerville recommends controlling everyday purchases by cooking at home instead of ordering takeout and watching fewer movies at cinemas.
6. Set a strict budget.
Clint Proctor, the resident Personal Finance Expert and Editor-in-Chief at Investor Junkie, a website dedicated to providing professional investment advice, unapologetically said, “your lifestyle should depend on a budget, and it’s not the other way around.” If you live within your means and set some extra money, you will have a surplus from your earnings. Also, Proctor exerted not to live a grander lifestyle even if your income increases because it will only end up in a never ending race.
7. Choose an investment that you know about.
Nataliya Kalava, Managing Director and Founder of the finance and business valuation firm American Valuations, shared to Skill Success that “your best personal finance strategy needs to reflect what you know.” Kalava thought that investments could only work once you know what you are doing or, at the very least, have a background in the industry you are joining. The related knowledge and experience will guide you in making wise decisions regardless of existing instabilities, like inflation.
8. Open a savings account.
Max Whiteside, the SEO and Content Lead of Breaking Muscle, finds it helpful for young adults if they “establish weekly or monthly savings goals and start saving.” While the money they conjure in a few weeks will look small and insignificant, consistently setting aside a few dollars will soon generate thousands. For this objective, it is best to open a separate savings account so that it will be easier to track financial progress and avoid mixing with other finances.
9. Invest in yourself first.
When Skill Success asked about the best financial advice for young adults, Alex Caswell, a Wealth Planner at RHS Financial, responded that they should “find ways to upskill themselves and look for a better career.” Before investing in anything else, young adults should not forget to invest in themselves in the form of upgraded career-related skills. Attending online courses and unlocking certifications will help open brand new opportunities leading to the fulfillment of financial goals.
10. Draft a financial disaster plan.
Matthew Roberts, the Chief Operating Officer of My Choice, a Canadian home and auto insurance company, advocates creating financial disaster plans. Every person, especially young adults, can benefit from this because the drafts will force stakeholders to intently look at worse-case scenarios and the possible solutions to survive them. He said your emergency fund, an essential part of the plan, “should ideally accommodate at least six months of living expenses.”
Build your personal finance early
Young people, beware. There is no such thing as a financial risk too small to be ignored. At this point, you might feel carefree and confident that all money problems will fix themselves and fade away. But unfortunately, they do not.
Do not put your own financial future in peril. Learn what you can about financial security today.
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