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Being in control of your finances and effectively managing your money should be a top priority no matter what your age. Learning to set a budget and actually sticking to it is a practice that will not only help you today, but it will also lead to your financial independence throughout your lifetime.
Start Budgeting Early
Learning to make and live within a budget when you are young and funds are tight can be a struggle. Those who are in college or are just starting out with a new apartment and job know just how hard it can be to make ends meet sometimes.
Listening to budgeting tips and making good financial decisions when you are young can help prepare you for the future and make a huge difference in the way you deal with your finances as you get older. Setting a budget now that includes living within your means and setting aside some money in savings each month is the best way to ensure you reach your long-term goals and have a bright financial future. Here are some budgeting tips to help you achieve success.
9 Easy Budgeting Tips for Young Adults
1. Start Saving Early
Putting a little money aside each month in a savings account might seem impossible when you are already on a tight budget, but even saving as little as twenty dollars a week can really go a long way when it comes to building for the future. Consider investing in your company’s 401(k) which often offers matching contributions from your employer to help you save and invest.
2. Learn and Use the 50/30/20 Rule
The 50/30/20 Rule is a great way to stay within a budget and save for the future. This popular savings method includes setting aside 50% of your income for necessities, 30% for things you want, and contributing 20% to your savings account each month.
3. Always Prioritize Paying Off Debts
Living debt free is the best plan for a successful financial future. Focus on paying off debts - especially those with higher interest rates - so that you can avoid spending extra money on finance charges and invest that money in savings instead.
Enjoy our budgeting and money-saving tips to maximize your budget by downloading our free guide:
4. Invest in Yourself
Doing things such as learning new hobbies, increasing your skills and knowledge of a subject, and staying healthy and in shape can set you up for future success if you turn these actions into an income stream that will add to your savings.
5. Learn About Taxes
One of the first things you need to learn when you get a job is how income taxes work. Knowing the difference between gross pay and net pay is crucial when trying to set a monthly budget. Understanding that a portion of your income will be deducted for taxes means making sure your net pay (salary after required tax deductions) is enough to pay your bills and is crucial to your financial well-being.
6. Understand the Different Types of Bank Accounts
One of the first things you need to learn when you get a job is how income taxes work. Knowing the difference between gross pay and net pay is crucial when trying to set a monthly budget. Understanding that a portion of your income will be deducted for taxes means making sure your net pay (salary after required tax deductions) is enough to pay your bills and is crucial to your financial well-being.
7. Have a Dedicated Savings Account
In addition to a checking account for paying bills, savvy savers should also open an account for long-term savings. In fact, go ahead and have an automatic transfer set up with your job, so your funds can be directly deposited to your savings account each payday to make saving effortless.
8. Start an Emergency Fund
Having an emergency savings fund is the best possible way to protect yourself from unexpected expenses or life events that can be financially draining. Putting your money in a money market account or high-interest savings account will not only protect you in an emergency situation, but you will also reap the rewards of interest deposits.
9. Negotiate and Maximize Your Salary
Although some may find asking for a salary increase a bit intimidating, knowing your worth and negotiating your salary from time to time is a savvy move. Also don’t forget that benefits like bonuses, paid time off, and matching 401(k) plans are also valuable to your long-term financial goals.
The key to a bright financial future is learning how to properly budget when you are young. Following these helpful budgeting tips now can lead to a lifetime of good financial choices that means success in the future.
Maximize Your Savings with CCCU
The benefits of having an emergency savings fund are endless, especially when you are a young adult that may encounter unforeseen circumstances. Having a dedicated Savings Account, Checking Account, or emergency fund is one of the smartest financial decisions you can make for your long-term financial health. If you have questions about the differences in these types of accounts, contact CCCU today. We are here to guide and advise our members.
