As a continuation of Financial Advice for Young Adults (Part 1), here is some additional helpful information that can help young adults develop good financial habits that can last a lifetime.
- Be careful with credit cards – While it’s a good idea to have at least one credit card in order to start building a good credit score, be very careful about using this card and/or taking out multiple credit cards; paying for everything with a credit card or taking out multiple cards can quickly launch you into overwhelming debt that can be extremely difficult to dig yourself out of. Good tip for responsible credit card management include using the credit card only for specific purchases (like gas) and making sure to pay off the balance each month (as carrying a balance will hurt your credit score).
- Don’t forget about your savings – As you figure out what your monthly expenses are, be sure to allot some of your income towards growing your savings – even if it’s only $10 or $20 per month. Being diligent about investing in your savings is a good practice that will pay off in the future, particularly if an unexpected expense comes up and you need a chunk of money to cover it.
- Don’t jump into real estate investments – Real estate is one of the largest investments you can make, and as such, it can tie up a large portion of your assets for years. While it may be tempting to immediately buy a condo or other real estate, it’s important that you take into consideration whether you plan on staying in that location for at least another 10 years and/or whether you will be able to rent out the property if you are ultimately unable to sell it.
- Start investing in your retirement – Although retirement may seem so far away when you are just getting out into the world to start your career, the sooner you start building your retirement savings, the better (especially considering that many retirement accounts have good interest rates that can start growing your money immediately). As with your personal savings account, getting in the practice of setting aside some money each month for your retirement account is a good financial habit that will greatly pay off in the future.
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