Turning eighteen isn’t just about coming of age and officially becoming an adult. It’s also a period of transition in your life, the dawning of an era that requires you to be a real deal, actual grown-up. While being an adult can be pretty awesome – nobody questioning if you’re allowed to see that R-rated movie by yourself, for instance – it also comes with a host of responsibilities, too. For example, what about your financial obligations? Nobody bothers to teach you how to handle your money when you’re in high school, which means you’re given a crash course lesson the moment you get your first paycheck. If you’re looking at adulthood with more than a touch of trepidation and you’re not sure how to handle this newfound freedom, here are four tips to help you stay on track!
Create a budget
It’s so tempting to go haywire whenever you get a paycheck. Hello, moneybags, you’re rich now! You’re going to treat yourself to something nice, like new shoes or some deep dish from your favorite local pizza joint. Except…that money is probably already spent, but you just don’t know it yet. That’s where a budget steps in. You need to know not only how much money you make, but how much money you need, too. How much is your rent? What about your electric bill? Your cable and your internet? Earmark those dollars for the essentials, but be sure to set some aside for fun stuff, too. You gotta have some fun with your money, right? After all, you did earn it!
Track your spending
Not only do you need to set up a careful budget, but you also need to know where your money goes. It’s all too easy to blow through your entire paycheck on little frivolities. That double mocha frappe drink? At five bucks a pop, they can seriously start to add up. The drive-thru? That was another ten dollars blown right there. By being mindful of where your money goes, you can curtail mindless spending so you can have resources for what you really need and what you really want, too. (Real talk: that new Xbox will totally be yours if you choose your long-term goals over instant gratification!)
Save for a rainy day
There’s a saying that goes something like, “When the sun is out, you’re not thinking about the rain.” Or maybe we just made that up right now. Who knows? The point is, when you’re in the black (meaning you’re making good money and your life seems to be going right), you’re not thinking about when things can take a sudden turn south. Nobody wants to live off ramen and sadness when your car suddenly breaks down or your find yourself on the receiving end of company-wide layoffs. To avoid finding yourself in hot water, you absolutely need to create a savings account for these unexpected emergencies.
Plan for the future
As a young adult, you’re probably not spending too much time worrying about the future. Heck, you’re still young! It’s way too early to start thinking about retirement, right? Uh, no. That’s a big fat wrong, my friend! Even if you’re still in your early 20s, it’s never too early to start planning for the future. It’s a good idea to start setting aside funds for a 401K or, if you think that’s overkill, at least spend a few minutes chatting with a financial advisor. Older you will thank younger you for your foresight!
Mastering the art of money management
If you’re feeling confused and lost when it comes to how to handle your money, don’t worry. You’re not alone. Remember, we’re not born with this automatic, innate financial wisdom. Just like learning how to ride a bike or paint or run, knowing how to manage your finances is a skill that you need to hone over time. Even if you didn’t pick it up in a classroom, you can still learn it now. Even if you slip up and find yourself ordering takeout when you had perfectly good food at home (okay, we’re starting to sound like your parents!) or you splurged on a new video game that you probably didn’t need, you can simply get back on track the next day. By being patient with yourself, and of course applying these four financial tips, you can finally be a financial smarty-pants, too!