Being in charge of your own money can be exciting but a little daunting too. You might have had your own money to manage before, but it’s different when you have to start paying for things you need. As you become more independent, you need to learn to manage your money and make sure that you can cover your expenses. Some young adults can go a little overboard with spending, excited with the freedom of having their own money. This is especially true for anyone who may not come from a family that’s responsible with money. But if you want to manage your money in a healthy way, there are some key things you can do.
Track Your Income and Spending
You can start by making sure that you’re keeping a close eye on the money you have coming in and what goes out. Whether your income is from work, student loans, an allowance from your parents, or something else, it’s good practice to know how much you have and how much of it you’re spending. If you have an online bank account or mobile banking app, it’s easy to check your balance and spending at any time. There are also some great apps for tracking your expenses.
Create a Budget
When you know how much money you have and what you’re spending, a good step to take next is creating a budget. A budget will help you to understand your expenses better and could help you to find ways to save too. Firstly, identify your most important expenses. These could include rent payments, bills, school books, transport, and food. Some of these might be fixed expenses, but you might be able to reduce some of them too. Of your remaining money, you allocate budgets to different things you want or need to spend money on.
Be Careful with Credit
Taking out credit can be a big responsibility, but it can also be very helpful. However, it’s important not to get sucked into the trap of treating it as free money. It can allow you to defer payment on some things or spread the cost of some expenses, and it’s also good for building a healthy credit score. But you want to avoid building debt that you can’t handle. It’s a good idea to start with a credit card. Use a site like Compare Credit to find the right card. If you pay off your balance every month, you won’t have to pay any interest but you’ll benefit from delaying your payments for a few weeks.
Set Some Savings Goals
Aiming to save your money is a great thing to do if you want to be financially responsible. If you can manage not to spend all of your money right away, you can save it for the future. There are plenty of things you might choose to do with your savings too, from indulging in something you want to investing or even buying a home in the future. Set some savings goals to start saving for the things you want.
If you start off on the right foot when managing your money, you can build good habits to continue in the future.