At any age, money management can prove challenging. Emergencies and unexpected costs can arise without warning, wreaking havoc on savings. Of course, saving money is particularly challenging when your car breaks down, you catch the flu, and you drop your phone in the toilet in the space of a week.
Young adults just starting their careers can have even greater difficulty pulling together their finances. Student loans, early-career salaries, and inexperience with money management can all scramble a budget for those just starting out.
Still, many financial experts agree that getting your finances under control at an early age is essential to a lifetime of fiscal responsibility. Here are five tips for the young wage earner to stay afloat:
- Pay Off Credit Card Debt
One of the biggest struggles for young earners is learning to manage debt. Student debt is often hulking and will require years to pay off, but other debts can be reduced more quickly. Under 30 CEO recommends paying off credit cards on-time and chipping away at big debts to avoid spending too much on interest rates. Most Americans spend about 26% of their annual income paying down debts, but with diligent planning, young people can reduce this percentage to spend money more wisely on other necessities.
- Construct a Budget
Another essential step for young people is actively keeping track of their spending. Though U.S. News and World Report admits that budgets can feel restrictive, remaining conscious of where your money goes each month can help young consumers make better choices. Using a budget might also help young people find room for more fun spending after they’ve accounted for other essential bills.
- Start Saving Now
Finally, U.S. News insists that young people must begin saving as much and as early as possible. Saving before you have a mortgage or kids will carve a smoother path for those later-in-life expenses. Specifically, saving for emergencies and for retirement will help new wage earners climb out of financial insecurity quickly. Though retirement may seem distant, U.S. News reminds young workers that many companies will match retirement contributions, so starting early can help them reap rewards for decades.
By following these tips, any twenty-something can go from getting by to getting ahead. Start early for a lifetime of relatively stress-free financial stability.