Personal finance

Top Financial Management Tips for Young Adults

budgetTill the time when personal finance management becomes a subject for colleges, young adults will have to take upon themselves the responsibility of being smart and knowledgeable about all the personal finance problems they can expect to face when they leave the college and begin earning from the first jobs. The good news, however, is that managing your personal finance, taxation, wealth management, assets management, and investment portfolios is not rocket science; it's just that you need to be open for reading. Even when you grow into your business or career and begin enjoying substantial monthly inflows, and feel the need to get professional and credible asset management services from firms like DJ Asset Management, you will need to summon your knowledge to ensure that you communicate clear financial goals, are able to understand the nitty-gritty of the financial advice given to you, and are in general able to understanding the financial environment relevant to you. Meanwhile, let's help you learn some tricks of the trade.

Learn better than falling for the credit traps all around

The current generation is not to be blamed for making financially laughable decisions; it has to fight the strong will and greed of lenders who try to make the virtues of patience and self control extinct. Even if your parents have taught you the lessons of not falling for materialism, and learning to delay gratification for the achievement of more important financial goals, you will find it tough to find the self control that helps you buy as per your capacities. Consider this - all you need to bring home a car is money amounting to about 10% of its cost, and a phone call to a lender's representative. Whereas bringing home the latest car might not take more than a couple of days, paying the same off could take 10 years! A few good practices about credit cards include paying off your balances in all entireties at the end of the month, and limiting the use of the card for times when you can avail offers linked to the cards. Regard every event of having to use your credit card as a reminder of your financial imbalance; that shall help you stay grounded.

Be responsible, take control, don't let others hold your financial steering wheel

Here's the hard truth - ultimately, there will be some pattern to your financial management, whether you establish it yourself or let others do it for you. Why let somebody mismanage and ruin your finances for you when you can do much better, that too with all the motivation in the world (nobody will be more dedicated to making your money grow than yourself). Whether it's the bloodsucker of a financial partner who lures you into investing on unduly significant and expensive credit, or the well meaning but ignorant aunt who can't help scolding you for delaying your first house when in reality you can't afford one, you will never be too far from misdirected advice. The worst part is that you will be tempted to take if you don't use your head. Don't blow off your money on the weekends just because your friends do so, don't rush into purchases, don't live on credit - read a lot, or get genuine advice, and avoid your finances from being somebody's punching bag.

Tracking makes you a better financial manager

You can't correct what you can't know. Tracking is the beginning point of all financial management tips and tricks, so get into the recording groove at the earliest. Whether it's a pocket diary or a smart financial management and budgeting app in your smart-phone, pick the method that suits you the most, and begin recording. It's everybody's experience to first disregard this simple piece of advice (everyone believes that he/she has perfect knowledge of how his/her money is being spent), and then learn the importance by hard experiences. Be smart, and try the experiment for a quarter, make expense heads such as rentals, bills, dining out, groceries, outings, etc, and see the sinks where you are poring your money. Then, prepare a budget that meets your savings and investment goals, and match your expenses with the budget.

Build an emergency fund

The desire of being free from your education loan is justified, but emergency funds are best not viewed only as ‘funds create to meet any inadvertent emergencies in the future'. If you designate a certain percentage (anything between 10% and 20%) of your monthly inflows that you will siphon off into an emergency fund, you'll soon realize that you will have a substantial pool of money available for down payment for your first car, your first house, the much desired and awaited family cruise, and several other things important to you.

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