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Things every young person should know as they start living on their own / Financial Guidance for 20-somethings

07 Apr

Welcome to your life!!  Here are a few things you should be aware of about how to be financially successful.

 

1.  Protect your Credit Score!!

Consequences:  Bad Credit = No place to live, no roof over your head!!  Landlords will not rent to people with bad credit and you can’t buy a house with bad credit this means, you will have no place to live with bad credit.  Many other things happen with bad credit but this is the biggest!!

 

2. Check how much money you have in your accounts every day or every other day.   Don’t overspend!

Consequences:  Overdraft, writing bad checks, JAIL time for consistently writing bad checks, extra costs for INS (insufficient funds, checks bounce), credit cards don’t get paid, bills don’t get bad, BAD CREDIT, see #1

 

3.  If you have a credit card, that doesn’t mean you can just spend and spend.  Don’t spend more than you have to pay off.  Look at your credit card statement daily / every other day and compare to how much money you have.

Consequences:  You spend more than you have, you can pay bill, late fees, overlimit fees, no money to pay, interest and late fees compile on top of each other VERY QUICKLY, until eventually they shut off your card and you owe a ton of money and have BAD CREDIT, see #1.

 

4.  If you have checks in your check book, that doesn’t mean you still have money!  Know how much you have in your account.  You can’t just go buy things because you want to, make sure you have money to pay for it.  When Mom and Dad aren’t paying the bills anymore, you may have to learn how to cut out habits you were used to.

 

5.  Save money for bills that occur sporadically or when they show up you won’t have money to pay for them.  Car insurance, car taxes, regular taxes, property taxes, car breaks down, etc.    Do you know all the categories you pay on a yearly basis, save monthly so you will have money for this when the bill comes due, rather than having the bill come due and realize you can’t pay your insurance and know can’t drive legally.

Consequences:  Your bills come due and you can’t pay so you:  choose to do something illegal – drive without insurance, not pay taxes, etc.  This risks LEGAL RAMIFICATIONS including JAIL and getting SUED, car taken away, etc.  Don’t risk it.

 

6.  Pay attention to due dates, you can’t be late on important things or wait to the last minute (because you never know if something comes up and say you are violently ill and then can’t do it the night before).  Use a calendar, pay attention to deadlines, do things early, use a To-Do app on your phone.

Consequences:  If you forget to pay taxes, you could lose your car, get fined, get audited, go to jail.  If  you don’t pay your insurance on time, you could lose insurance with the company and then maybe not be able to get a new policy or your new policy will be more expensive (plus time consuming to find and open) and if you will be driving without insurance.  If you don’t register your car, you will get a ticket and be required to go to court, do you really want to give you your day to go to court?  And have another thing you have to remember?

 

7.  Save some money, pay yourself first.  All smart people, save money and do not live paycheck to paycheck.  You can never get ahead if you spend every cent.  You need to save money and then find a smart investment vehicle for that saved money and let your money make money for you.

Consequences:  Won’t have money when you have an emergency to pull from, can never get ahead, can never be wealthy.

 

8.  Start an IRA / 401K before you are 25.  We will all get old some day and we only have our own savings to rely on to pay our bills when we are too old to work.  It is not something ANYONE wants to start thinking about in their 20’s (I didn’t) but with the power of compounded principal and interest, it is the best and easiest way to make sure you live a comfortable life when you are older.  Don’t count on money from any other source, only money from yourself, you don’t know if social security will still be around or what it will be like or if your parents will have any money left over to leave you, so start saving and thinking about it by 25!

Consequences:  You live in very uncomfortable situation with little support when you most need medical help and comfort from old age ailments.

 

9.  Live wealthy, not Rich.  People who are wealthy are smart people who learn how to manage wealth, save money, spend responsibly, and let their money work for them.  Rich people are who have a lot of money for a short time, are irresponsible with it, spend it all trying to live a Rich Lifestyle without long term thought, and end up poor.

 
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