Young people are the next wave of the financial market. However, we often hear stories about young people who struggle to save, are stuck in their parents’ home because they can’t afford a down payment for a property, and don’t have a retirement plan set up. This can lead many people to put off major life decisions, such as starting a family or buying a home.
Nine members of Forbes Finance Council shared their best financial tips for young people who are just starting to manage their finances so they don’t have to delay major life events. Here’s what they had to say:
1. Plan Ahead
You cannot generate funds out of thin air and debt, unless you go bankrupt, will not disappear. The first advice would be to plan ahead wisely in order to avoid running into problems. For example, find accurate information about which academic majors and universities will provide higher returns on investment, and carefully take this data into account when deciding where and what to study. - Gabriele Grego, Quintessential Capital
2. Know What You're Getting Into
The most important things students should look at are the average salary and benefits that their career choice will bring in. Knowing this will enable them to manage how much debt they can withstand in the first place. If the student can budget so that their total student and credit card debt won’t be more than their first year’s salary, they should be in good shape to save for other life events. - Jared Weitz, United Capital Source Inc.
3. Just Say "No"
There are credit card companies and retailers who often market credit cards to students. Just say "no" to them, and don't fill out the application. It's easy to say "yes" to friends when they want to take off for the weekend or the summer on a trip. However, if you don't have the money you need to do so, just say "no." Spending money is a choice. Taking on debt is a choice. Focus on putting money aside. - David Gass, Anderson Business Advisors, LLC
4. Pay Down High-Interest Debt
While it can be beneficial to get into the habit of saving for a down payment on a home or putting money aside for retirement, neither should be done at the expense of paying down high-interest debt. Credit card debt in particular can be crippling. Consider utilizing low-interest balance transfer offers to accelerate paying down debt. Just make sure to read the fine print and adhere to the offer terms. - Ismael Wrixen, FE International
5. Be Careful About How You Use Your Credit Card
Credit card debt needs to be looked at closely. Credit cards are modern-day necessities but can cause financial ruin if they're not utilized properly. Outside of true unexpected emergencies, credit cards should be paid in full every month. If debt already exists, the only focus should be paying down that balance. The interest rates can be outrageous. - Francesca Federico, Twelve Points
6.Stick To Your Budget
Build a budget and stick to it. Don't try to achieve your parents' lifestyle 30 years earlier than they did. Our parents likely reached their goals by living below their means and saving at a young age. You will get there; however, it will not be overnight. Be patient, and know that your dreams are achievable if you chip away at them a little every day. - Justin Goodbread, Heritage Investors
7. Focus On Incremental Change
It is easy to get wrapped up in the total amount of debt you have to pay off, and this can be defeating. If you focus on incremental change versus paying off the whole debt, you will be happier and make more progress. Consider how much you can budget without sacrificing all fun, investing and savings, program that into your budget, and set your autopay. As your income rises, incrementally adjust the amounts. - Scott Karstens, NFG Brokerage
8. Think In The Long And Short Term
It’s important to think both in the long term and the short term. With expensive debts like student loans, a short-term savings plan is critical for any emergencies or changes to your income. Longer-term retirement vehicles can help you maximize tax advantages and build a nest egg for your future. Either way, start and stay consistent. - Chris Kline, Bitcoin IRA
9. Gain Insight Into Your Spending Habits
The first step is getting your finances in order by gaining insight into your spending habits. Break down how much you’re spending and on what to better identify changes you need to make to your spending. By looking at a more holistic picture, you can make minor tweaks that will pay off in the long run. - Adam Dell, Clarity Money
