This post shows you the best personal finance tips for young adults!
Looking for real-life advice on navigating personal finance? The landscape of money has changed but the path to financial independence is the same!
Ever wonder why some people seem to earn less but have more while others earn more, yet it never seems to be enough?
People seen as financially independent receive a lot of speculation, almost as if they are hiding a big secret.
Well, the secret is personal finance! And that freedom they have today is from seeds planted yesterday.
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It’s rare to find personal finance tips that are tailored for young adults but sometimes it’s helpful to hear from someone who has been through it.
Now I’m not a financial advisor or expert and you definitely shouldn’t take this post as financial advice.
But I am in my 30s, a single female homeowner with no debt or car payment, and I’m able to save and comfortably invest over $1000 monthly.
And I did this making only 65K a year.
If you’re looking for actionable ways to set up your financial future, here are the top things I did in my 20s to gain financial independence.
Does it delay gratification and suck a little bit? Maybe. I get it, driving a hooptie may not be glamorous and it sucks being the butt of jokes from your friends.
But you know what sucks even more? Eating tuna and living on a prayer at the age of 70.
Why Your Financial Future Matters
Your peers probably think a high-rise apartment or an expensive car is the most luxurious thing to have as a young adult.
But they’re wrong.
Time is the most luxurious asset to have as a young adult. And it goes quickly.
While long-term financial freedom should be a goal for everyone, here’s why following personal finance tips for young adults right now is so important:
- No one is coming to save you. Your future will not depend on a politician or job and 401k. It will come down to your resilience and your knowledge.
- Plan your future. Now is the time to plan your life’s path before it happens. Don’t make the mistake of starting to care when it’s too late.
- Determine quality of life. Personal finance is involved at every step in life so learn it now! It’s an endless list that will only get more complicated the older you go.
You don’t need to have everything figured out as a young adult but now is the perfect time to start. Knowledge is everything!
The Top 10 Personal Finance Tips for Young Adults To Do Right Now
1. Pay Yourself First for an Emergency Fund
The most important factor of a budget is having an emergency fund. If you can have discipline to save for one, then your financial future will be bright.
An excellent goal is to commit to saving every paycheck.
For me, that’s bi-weekly. But you can do whatever makes the most sense of your lifestyle.
But it should be a schedule that is going to keep you most consistent.
You might even consider two separate bank accounts. Use a traditional bank as well as a credit union to send automatic transfers so you don’t even have to initiate the money leaving your account.
Whether you’re saving $500 a paycheck, or $5, you have wiggle room somewhere and you need to pay yourself on time, every time!
2. Don’t Buy a Car You Can’t Afford
Another goal I recommend is not living above your means, which usually comes in the form of a car.
Don’t make the mistake of only looking at monthly payments and not maintenance and insurance costs.
All you need is a solid, reliable car that can get you to and from work.
Buy local from an elderly couple. Usually, these cars are reliable, well-taken care of, and don’t have a lot of miles. You can also bet they aren’t trying to scam you!
You don’t need to meet the unrealistic goals you see on social media. It’s better to build wealth slowly through frugal habits and smart financial decisions.
If you must buy brand new, do your in-depth research before you even think of stepping foot in a car dealership.
3. Pay Off Debt Using the Snowball Method
When it comes to paying off debt, quick wins are a great strategy to aim for.
The snowball method approach for a debt payoff journey brings longevity.
Most people will tell you to pay off high-interest debt first and while this makes financial sense, but psychologically, the snowball method will ensure you stay consistent.
Either way, if you’re in the hole, now is the time to come to terms with it and make a plan to start paying it off. Whatever makes more sense for you and your lifestyle is the path you should go down.
Take a deep breath and call your credit card company, student loan servicer, or car dealership.
Most people are willing to work out a hardship payment plan or reduced interest rate for those who are making an honest effort.
4. Harness the Power of Roommates and/or Family
The next best thing to not having a car payment is splitting rent with a roommate or not paying rent at all due to generous parents.
For me, roommates are what allowed me to save half of my paycheck while still taking vacations throughout the year.
I saved enough money for a down payment on a house!
Social media is great at illusions of grandeur, independence, financial wealth, and having things figured out by the time you’re 25.
Here’s the truth: None of that stuff is real. No one makes it without community or some type of help.
Rent or a mortgage will take the biggest chunk out of your paycheck so being able to split with a roommate is amazing.
With a temporary roommate, you can easily save money in one swoop and probably still have some fun money in your budget left over!
5. Stop Wasting Time and Money
It always starts with what you think are innocent purchases. A new subscription. An Amazon package here, a small iced coffee there.
Not only are these things you can do without but you are probably more productive and creative without.
Make sure you spend more time learning than scrolling. Take a free course. Learn to sew. Go to the gym. There is an entire world of discovery out there!
When I started my debt-free journey, I took up freelance writing for extra income and learned to write for different industries.
Not only did it increase my cash flow, but the experience helped me transition to a new career!
6. Increase Your Main Income And Never Get Too Comfortable
If you have reduced your bills all you can and you’re still on the struggle bus, it’s time to get serious about other options.
To make more money, you have to reduce your expenses or increase your income. It’s really that simple.
Look at your work experience and start a targeted search to apply for other jobs that you can qualify for. Build a network of mutually beneficial relationships.
When I decided to transition careers, I took on a low-paying contract for 6 months.
That small sacrifice was the catalyst for my career transition.
Learn new skills by working for a start-up. Or take on a contract for a dynamic career change! Continue self-development, invest in a creative side hustle, and shoot your shot.
7. Find an Additional Stream of Income
I am a huge advocate for the traditional 9-5 with benefits but I also think a separate stream of income is necessary.
Who are you and what kind of energy do you want to put out into the world?
For me, my first love is writing. Blogging is a perfect additional stream of income for introverts and I love to help others which spurred the idea for this blog.
You may be great at content creation, artistry drawing, or crafts like sewing and fashion. It just depends on what you genuinely enjoy doing or what you have a passion for learning.
The world as we know it is coming to an end. Harness your creative energy and bring in income based on your talents. Learn who you are, the kind of legacy you want to leave, and lean in!
8. Avoid Broke People
Misery loves company. If you know you have financial goals that you want to achieve, no matter how delusional they seem, then you can achieve them.
Mindset is the #1 thing that prevents people from achieving their dreams.
So if you decide you want to become a millionaire, and you get snide comments from friends or family, it’s time to distance yourself, change your circle, or learn how to keep your goals to yourself!
Surround yourself with ambitious people in personal finance community groups on social media.
Make sure you’re viewing content that is aligned with your future so you can manifest it into reality!
9. Invest Early with a Diverse Portfolio
Investing in new assets may seem risky.
The real risk is never harnessing your creative energy to bring wealth and abundance into your life!
I try to eliminate risk through diversification. This simply means don’t put all your eggs in one basket.
Here are some ways I’m investing:
- 401K: I receive a corporate match from my job but invest in an index fund but that’s about it. Haven’t been the most trustworthy investment vehicle in the past.
- Traditional IRA: I roll over my old 401k into a Traditional IRA so I can choose my investments and get rid of the ridiculous management fees. Don’t ever leave your old 401ks, track them down and roll them into an individual retirement account.
- HSA: If you are generally healthy and on a high-deductible health plan, an HSA is great. You have a company match, you can spend on medically-approved items, and invest the money!
- Cryptocurrency: This is still an extremely volatile market and I would not recommend investing if you need the money. Although there is utility in digital assets, I would still compare this to gambling in a casino.
Investing doesn’t just mean the stock market. You can also invest in your financial education just by watching personal finance videos on TikTok and YouTube!
10. Learn to Fail and Fail Fast
The point of being young is that you can be dumb but still have plenty of time to recover from your mistakes and figure it out.
So while you have the time, don’t waste it by playing small and caring about what others think and waiting for their validation. Because you’ll never get it!
Change careers.
Go to that networking event.
Start that first business and let it fail.
Failing is how you learn. No one ever got it right on the first try. But the earlier you try, the more time you have to bounce back. The only time you fail at life is when you never try in the first place!
This Post Has Shown You 10 Personal Finance Tips for Young Adults!
By learning basic finance and building a nest egg slowly through frugal financial habits, you can build wealth with these personal finance tips for young adults!
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