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10 Smart Financial Practices for Every Young Adult

Mastering your finances through money management, especially when you’re just starting out, is tricky for most people. Suddenly, you go from allowances and parental safety nets to flying solo. There’s no bargaining with a pay stub, and costly mistakes can be difficult to reverse. However, if you start cultivating your resources now, you’ll be able to build wealth and control your financial destiny. 

You must establish and adhere to your own rules of personal finance. To get started, you can base your rules on these 10 financial practices that every young adult should do to manage their money properly:

  1. Keep an updated account balance ledger. Online balances can’t always account for uncashed checks, scheduled payments or delayed transactions. Money may still show in your account, but spending it may result in hefty overdraft fees and even credit score penalizations if you can’t repay it. Keep receipts, and enter all transactions in a running ledger so that you can check actual balances daily.
  2. Use scheduled deposits to make building your savings a priority. While rent, car payments, insurance, utilities and phone expenses add up, there’s always some luxury tempting to consume whatever’s left. If you don’t pay your savings first, you probably won’t pay it at all. Instead, enroll in an automatic draft schedule. Your institution can automatically deposit a portion of your pay directly into your savings, a place where you’ll be less likely to spend it.
  3. Decide what’s worth it and what’s worth less. Culture tries to convince us that we need the best of everything when in reality, that simply isn’t possible for most of us. Instead, identify lean categories of spending where you can economize — generic foods and supplies versus name brand. Owned versus brand new. Do-it-yourself services or projects versus hired help. Homemade lunches and coffees versus restaurants and cafes. The money you save on economic purchases can help fund splurges in more luxurious categories.
  4. Save a predetermined portion of every bonus. Whether you get a $20 rebate, $200 in birthday cash or a $2,000 bonus, that money is a perfect way to boost your savings. When a bill is lower than a budgeted amount, that’s a bonus too, so roll those unspent dollars into savings. Try to put at least half of every windfall into savings.
  5. Calculate a budget so that you can stay within it. Allowing expenses to exceed your income steals from your future. Instead, identify how much a reasonable living should cost from month to month, and act accordingly. For example, air conditioning can send electric bills skyrocketing, so turn thermostats warmer when you’re not home. Likewise, repeated high-mileage trips can not only cost you in gasoline but also put wear on your car and raise your insurance rates.
  6. Make time to shop strategically. Convenience is nice, but it can also be costly. Savings from splitting shopping between the specials at two different stores really can make a difference. Buying online and picking up in-store may save you more than shipping fees — the item itself may be cheaper. You can also make saving high-tech — any number of apps do everything from compare prices to rebate price differences.
  7. Be selective with leisure equipment and hobbies. Many activities require specialized equipment that can be expensive, especially if you try to maintain a number of casual pursuits. Rather than buying the top-of-the-line brand new gear, consider checking out rentals, buying quality used items or limiting purchases to one serious discipline.
  8. Pay for necessities in ways that earn benefits. Buy $50 worth of grocery specials in the weekly ad, and you may be eligible to buy a $50 promotional gift card for just $40. Accrue loyalty points, and enjoy savings in food and gas. Use a credit card that will reward you for purchases that you’d be making anyway. It’s all good as long as you're buying what you really need and can pay balances in full each month.
  9. Anticipate extra expenses as part of your regular budget. Eventually, your car will need a new set of tires or that dreaded scheduled maintenance. Holidays, birthdays and the gifts you’ll have to buy come every year and so do special occasions like weddings, births or graduations. Anticipating these expenses and setting spending limits can help keep you within budget and financially stable.
  10. Keep an emergency fund. Life doesn’t always go smoothly. Pay cuts, job changes, relocations, accidents, illnesses, injuries and other challenging life events can prove devastating to an otherwise solid financial future. Ideally, an emergency fund should be able to sustain you for at least three months.

At La Capitol Federal Credit Union, we know that good money management decisions lead to a bright and stable financial future. Stop by your local branch today, and learn more about how you can manage your money and reach your financial goals.

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