Financial Advice Young People Cannot Ignore
Unfortunately young people usually have a disadvantage when it comes to financial matters. They haven’t been exposed to enough financial affairs to know how to make good financial decisions. If you are young and just starting your career or just moved into your own place take a deep breath and heed some advice that may not prove valuable today but will be invaluable over the long run.
#1 – Don’t Expect To Have It All
The biggest mistake inexperienced young people make is to think they can live like their parents when they move out. Appearances can be deceiving. Young people forget that their parents have been in the work force a long time so have higher incomes and more disposable income than they do. Parents have been saving money for years and most likely have their mortgages paid off therefore can afford to spend more frivolously.
#2 – Start Out Slowly
Young people are just starting out. They have not had a chance yet to accumulated money to blow. When they get their first pay check from their first job they think they’ve hit the jackpot; they feel like they’re rich. Expenses will soon follow. The fixed expenses will include the rent, car payment, utility bills, perhaps college loan payment, food, insurance. Then if they have money left over, entertainment.
#3 – Credit Cards Are A No-No
Credit cards can be so tempting but are so bad for you. They give you a false sense of security. However if you accumulate a credit card balance that is impossible to pay off that credit card debt will be with you forever and ever. It will follow you where ever you go. It will wreck havoc with your credit score. A poor credit score will increase the cost of everything you buy. So what’s so good about credit cards?
#4 – Invest Early, Invest Often
Make retirement plan investing a priority. Max out your retirement plan contributions when you start your first job; you will never regret it and you will not miss the money. The money you invest into your retirement account is money you do not see; if you do not see the money you will not spend it. Of course retirement is something people your parents age do. This makes it hard for you to visualize the priority of making an investment into an account that you will not use for 30 to 40 years from now. Don’t over think it, just do it.
#5 – Buy Insurance
You may feel terrific so do not see the need to buy life insurance but that’s the exact time to buy it. Insurance is very inexpensive when you are young and healthy so buy as much as you possible can. If you can afford it you may also consider long-term care and disability insurance. You never know what the future holds.