Being out on your own is a big experience, but you don’t need us to tell you that. There is going to come a time where you really do want to be out of your parent’s home, but you might not realize how good you have it. Once you have the freedom of being on your own, you also will have the responsibility of thinking about just every little thing that can go wrong — and trust us; there are a lot of things that can go wrong. You will not have your parents right there to take care of every little thing that comes on through, so this means that you’re going to have to develop some financial skills in order to survive.
First and foremost, you’re going tow ant to make out a budget. If you have a job already lined up, then you should know what you’re going to be making. Don’t go off just the gross receipts — try to estimate how many taxes they’re going to take out of the checks. This is called your take-home pay for a reason. You might get some if not most of your tax money back at refund time, but it’s better to practice smart accounting and make sure that you are only counting the money that you know will be in your bank account. Of course, it’s tempting to base everything off the bigger number, but this is something that is bound for disaster in real time.
When you’re first starting out, your job might not be glamorous, but hey — it’s a job, right? It’s something that’s going to take care of you, right? Always take jobs that are going to at least pay the bills. It might not be something that you want to do forever, but you never know what type of opportunities are going to be waiting for you because you took this job. It’s tempting to just assume that a “dead end” job has no opportunities, but today is a different story. Every job has chances for you to reach out and get to know people, and it’s people that can bring you jobs, not job listings online. Having the inside track to just about anything will make it a lot easier to be able to really get the job that you’re ultimately looking for. Even if you’re something that wants to start a business someday, the networking that you do will become very important later down the line.
Speaking of money, we know that you don’t really want to think about it, but there are going to be times where you have to step back and plan for a rainy day. You will need to set up an emergency fund. Yes, even if you only have a spare $20 a week for your bills, you’re going to still want to make sure that you build an emergency fund. Throw it into a savings account. An emergency fund should be as liquid as possible — you really don’t want to have to wait on your money when the clock is ticking. You don’t want to have to wait for someone to cut you a check the way most people do when they’re trying to draw money out of their retirement accounts.
Speaking of retirement accounts, you will want to make sure that you start thinking about the future of retirement. Yes, it’s a little early but if you can start your retirement account early you’re going to have a lot more money than if you just dealt only with having a little bit of money later on because you started so late. Even if all you can do is $100 a month on top of building your emergency fund, that’s better than nothing. You are still going to need to really make sure that you still think about the future. The sooner that you start contributing to a retirement account, the sooner that you’re going to be building the nest egg that you can count on later on when you might not be able to work. In addition to these benefits, there are some tax benefits to contributing to an IRA or 401(k). You will not have to pay taxes right away for these accounts, which can definitely help you save money without missing a beat!
If there’s one part of the equation that doesn’t get touched on enough, it’s definitely credit. We can’t stress it enough — there are going to be a lot of chances to build credit. Don’t feel pressured to sign up for a credit card just because someone is offering a free t-shirt and a candy bar for it. Your information is worth far more than a t-shirt and a cheap candy bar or even a full large pizza with all of the trimmings. Think about it — if it wasn’t profitable, why would they even be offering you that type of thing? If you really want to start slow you might want to go for a $250 – $500 signature loan at a credit union. If you bank there naturally, then they’ll be a lot more likely help you out. There are alternatives to credit cards, so you don’t have to feel pressure dot jump into credit cards. Even though people don’t want to admit it, you can actually book hotels and everything else with regular debit cards and even prepaid cards.
Once you know that your income is more secure, you can do ahead and get credit cards. Make sure that you track them and your credit report religiously. Don’t let anyone tell you that you’re being overly conservative or even downright paranoid. This game is not stacked in your favor. It’s stacked in the favor of the credit card companies, who are hoping that you don’t care and want to just do the bare minimum. Folks, if you do the bare minimum on your credit cards, you’ll always be paying off a balance. It’s not a good idea at all to just pay the minimum. If you have room in your budget to pay more, you should always pay more.
As you can see, so much about your financial future depends on your state of mind. If you assume that you should be just like your friends that aren’t interested in the world of finance, you’re going to be paying for that later. You’re going to have to stand up for the things that you want. If you want a car, you need to build a roadmap to get one. The same is true for a house. Building your financial philosophy and blueprint may take time, but we can tell you that it’s absolutely worth it to always know where you stand. No matter what the year brings, you can sit back comfortably and know that you’re going to be taken care of. We’re not going to lie to you — the world is very uncertain. It used to be a time where you could go to college and know that a degree was going to get you a job. Those days are long gone, and we strongly doubt that they’re ever going to return. That’s why it’s so critical that you take taking measure of the world around you, and really thinking about what you want to get out of everything.
Following the tips in this guide might not be cool, and it might not be interesting stuff to read. However, when you’re the only one of your friends that actually has money from week to week; you’ll definitely thank us — why not get out there and put these tips to good practice?