Think finances are dull? Well, they can be. However, if you're a young adult who's just getting started on your own, understanding money, credit and other financial planning elements can help make that start so much stronger. So, before you dismiss these topics, take some time to lock down the financial insights below to help secure your financial future.
You Do Need Life Insurance Coverage
If you want real financial security, you really do have to think about securing coverage for yourself. While the main benefit of life insurance is to provide family and loved ones with assistance in paying for funeral arrangements, medical bills and any other leftover expenses after your death, building cash value from it can provide you with a financial cushion throughout your life as well. Best of all, you can shop for a policy the same way you do everything else: online. Plus, you can compare policy rates online and figure out how much coverage you need before choosing a plan.
You Don't Need Every Store Credit Card
Understanding credit can be tricky for everyone, but it can be especially challenging when you're first starting out on your own. Start with the basics, like credit reports, scores and monitoring, so that you have a strong foundation for understanding how to use credit to build long-term financial security. That may involve applying for your first credit card, but you should avoid applying for every credit card or credit opportunity offered to you. Instead of racking up all of those inquiries on your credit report, try managing and budgeting with a single card first, so that you can establish smart habits around credit usage. This is a much better way to build your credit, plus the interest rates on many store cards are usually not worth the potential rewards. You are better off avoiding them due to their potential for poor credit choices.
You Do Need to Start Saving For A Home
You may not even be ready to rent your first apartment, but that doesn't mean you can't be smart and start saving for your very first home. If you can start saving early, you can save less each month and still end up with a sizable sum to use for a down payment. For a seriously savvy financial move, try tucking away any money received for graduation or birthdays into a high-interest savings account. Some accounts require as little as $1 to start and offer some serious financial gains if you can avoid touching those funds for the next few years. If you plan on renting
like so many other Millennials and younger generations are choosing to do, you can always use the down payment you saved to take advantage of the booming rental market with your first real estate investment, and have a passive form of income in no time.
You Don't Need To Give Up Avocado Toast
There's often a misconception among adults of all ages that in order to save, you need to miss out on the things you love the most. In reality, though, saving money doesn't mean making drastic sacrifices, especially when you can use simple savings strategies to make tucking those extra dollars away effortless. For example, if you and your best friend loves binging on Netflix shows, consider splitting the costs of your streaming service instead of paying for individual accounts, or carpool together to work and school. Other easy ways to save include searching for sales, clipping coupons, using grocery lists, creating budgets, and, well, this list could go on and on! So, you see, as long as you use the avocados and toast you buy, there's really no need to cut this little luxury out of your life for good!
Honestly, finances aren't always fun. However, understanding your finances can be the key to enjoying your life more. So, spend a little time on budgeting and making smart money choices, so you can spend less time worrying about finances in the future.
(Article Courtesy: Christopher Haymon via Adulting Digest)