Once you’re finally out on your own and have to start taking care of every aspect of your life, it can be daunting to consider all the things that have to be done in order for that life to stay in one piece. There are untold responsibilities, bills that must be paid, and, in many cases, debt that must be paid off. The harrowing journey to adulthood is fraught with ways for young men and women to mess up, but that doesn’t mean you are fated to make irreversible mistakes.
You will almost certainly be starting with a small budget, unless you happen to be one of the lucky few who lands a six-figure job right out of college, which is rare, to say the least. There are ways for those who aren’t so lucky to cut their costs and make their budget stretch as much as possible.
Don’t Use Credit Cards
According to a recent article regarding American credit card debt, it was found that 38 percent of all American households have at least some credit card debt, and of those 38 percent, the average amount of debt was $15,609 in 2015. It may seem like a good idea to use that trusty piece of idle plastic in your wallet or purse, but you must resist the temptation. There are occasions when it is good to use a credit card, but only if you are able to pay off the balance right away to avoid paying interest. In doing so, you build credit.
The problems arise when someone tries to max out the balance on three cards at once and assumes paying the minimum payment for thirty years won’t be so bad. In short, if used properly, credit cards can be your best friend, but if used irresponsibly, they can be one of the most hindering things in life.
Cut Costs On Everything
This may seem like a bold statement, but there’s a reason why budgeting exists in the first place. If the goal is to have the ability to earn enough to build wealth, one of the easiest ways to do that is by going cheap on nearly everything, and by paying close attention to what you use and spend. Don’t leave the light on when you leave a room. Turn off the water faucet when brushing your teeth.
Don’t linger in the fridge. Trade off your expensive cable or satellite service for a cheaper streaming option, like Netflix, Hulu, or Amazon Instant Video. Find medical and dental discount plans for insurance breaks. Buy store brand food when you go shopping. Avoid fast food or eating out in general, except for special occasions. Take lunch to work instead of spending an extra ten dollars every day. Saving money and budgeting correctly is all about self-control and willpower, as well as the creativity to find new ways to save yourself a few bucks. The small savings add up quickly.
Save As Much As You Can
The main goal of budgeting should be to put yourself into a position where you don’t need to budget, at least as thoroughly. Many young adults ignore this tenant when they first enter the job force, and create a budget for themselves that essentially equalizes income and spending. That may be fine for a short period of adjustment, but unless you expect significant and fast raises to your income, you’ll need to change the behavior at some point. Budget yourself so that you can put at least ten percent of each paycheck into some form of long-term investment, whether it be a savings account, stocks, bonds, CDs, real estate, or any other form you wish.
There are a whole host of things that young adults, and even older adults, can do to improve their budgeting ability and their saving power. The key is having the strength to make the changes necessary to do those things. The first step is gaining a bit more knowledge, and you’ve just taken that step.