Financial Advice for Young People
You might get tense when you hear “financial planning”, but it really isn’t much more than learning how to manage your money and understand your goals, daily expenses and future plans. It is easy for many to procrastinate when it comes to financial planning, but what everyone needs to realize is that timing is crucial to your finances and future.
Some financial tips to follow on your financial success quest:
1. Take advantage of college! Even if you plan on doing something that doesn’t require that degree, consider going to college anyway. To save on the costs that will accrue, attend a community college, then after two years transfer to a four-year college.
If you are young, it is easiest to get a degree than when you are a parent, own a home and have other adult responsibilities. Take out loans if your parents can’t afford to help and make it happen! With a degree, your potential earnings are much higher than without one.
2. Find a purpose. Look within to find what natural abilities and talents you have. Which subjects do you struggle with and which do you excel in? Choose a career that will allow you to maximize your talents to fulfill yourself and help others.
3. With your first job, begin planning retirement. This is a very important tip. Sign up for a 401(k) plan if your company offers it at your first opportunity. If this isn’t an option, start up an IRA and invest a chunk out of each paycheck. Setting up a retirement contribution early will help you painlessly build wealth.
For Example, you can have $525,000.00 saved by the time you are 65 years old if you invest $200 a month at the age of 25. Naturally, you can stash more money away if you earn more. Instead of choosing a number amount, take 7 percent of your earnings and each year increase it until you are investing 15 percent each year.
4. Place value on money! It might not bring you happiness, but it will make your more comfortable. For example, if you earn $20 an hour and you plan on buying a $500 TV, look at is like spending 25 hours of your work time.
5. Sparingly use your credit card. This is a vital tip. Consumers regularly overuse their credit cards and then find themselves in bad financial situations, some even filing for bankruptcy. It is easy to spend money with plastic now, but difficult to pay later, so use the credit cards responsibly.
6. The golden rule is golden, so follow it! The craftiness and duplicity of Machiavellian tactics really won’t help you survive, but will actually create mistrust in your relationships. Treat others like you would like to be treated and never try to make others look bad. Avoid gossip, especially when you are at work. When dealing with others, always be honest. Seek for the company of people who are supportive and positive towards your efforts.
7. Wisely select your partner. Choose someone with similar moral and ethical values. Take that first year and really get to know your partner. Trust is more important than passion. You can lose your self-sense and be subjected to hostility if you partner with someone who is overly critical or angry. Conversely, if it is you that has anger issues, fix them before you poison a good relationship.
8. Always prepare for what is not expected. You may lose a job someday. Stash money into an emergency fund. In addition to what you are adding to your IRA or 401(K), put a portion of your paychecks into a savings account.
Do not use your IRA or 401(k) for emergency situations. It will cost you a lot of penalty taxes and income. Remember, if you change jobs, roll your money into a rollover IRA or a new employer’s plan and do not leave it with your former employer because it is easy to lose track of it!
9. Either learn investment strategies or hire someone to help! It really isn’t rocket science. Select one or two cheap, good mutual funds and overcome your fear. Human resources departments should be able to assist you with finding someone to hire. Always check the credentials and qualifications of brokers and prospective financial advisors.
Be certain that you completely understand the services fee structure. Know if you pay by the hour, if it is based on commission or a percentage of assets. Sometimes it can be a combination of these.
10. Your good fortune is something to be thankful for. Through solid relationships and family ties, as well as monetary assets, you will have abundance if you work at it! Take time to spend on activities and hobbies you enjoy, take a vacation if you can and reflect on all the good in your life. Spend time with your children if you have any while they are dependent on you and still young.
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