Starting out in life as a young person can be daunting, and when you start paying your own bills, getting your own debts and making your own money, things can become a little bit overwhelming. You’ve got to start understanding how tax works, as well as how to pay bills and the consequences of unpaid debts. Here are some top tips that you can briefly consider and then delve into deeper as you go along.
Credit cards accrue interest
The idea of getting a credit card as a young person seems great – buy whatever you want and then just pay the money back later. However, unless you’re on a zero precent interest credit card, you’ll be accruing extra charges for every month that goes by and you don’t pay off the balance in full.
Invest in a pension fund
You’re young and you might not want to think about retirement at the moment, but start investing in a pension fund and you’ll be very glad of it in 40 years’ time. You only need to pay a tiny percentage of your income into the pension fund, and in some jobs, your employer will match your contributions, which means you’ll actually be saving double for your retirement.
Learn about trading and investing
You should take the time to learn stock trading, since it will help you understand finances better in general while also allowing you to experiment with stocks and shares yourself and potentially earn some extra cash. People who get into stock trading and are able to invest at the right times can often earn plenty of money alongside their regular income.
Becoming self-employed comes with financial commitments
Running your own business might sound ideal, but it comes with many responsibilities and commitments that you must ensure you can follow. If you’re hiring people, you’ll need to make sure you’re paying their taxes and getting the right type of insurance. You should keep receipts if you want to claim anything, and always make sure you file your taxes on time.
Always have some emergency money
Your parents and other people might be able to help you out during emergencies, but it’s always good to be independent and have your own personal backup. When you start working, you should start saving straight away – partly for things you really want to buy but also just to have a financial safety net in place for the future.
Do a monthly budget
You might think this is a bit old-fashioned, and if you’re not keep on the idea of writing everything on paper, there are many useful apps which you can download now to help you budget correctly. You’ll be amazed at how much money you can save with a proper budget, and just seeing where your money is going can help you to get a better grip on your finances and save more money than you spend.