Finances are a big part of your future, so investing in a healthy financial future is something you need to start thinking about sooner rather than later. While planning for the future doesn’t have to be overwhelming, it can be if you don’t take the right steps and plan early. Here are some of the things you should be doing before making a financial checklist for young adults and your next move so that you set yourself up for a successful future:
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Set up a bank account
Although you may not want to keep your money with your bank forever, setting up a traditional savings account is unlikely to be an extravagant expense. It’s important to get into the habit of saving a portion of your income regularly, so you can access it when you need it. If you have trouble saving, try setting up a separate account in your own name and using a different computer than your main one so you don’t have access to your parents’ login information. This will prevent you from accidentally logging into your parents’ accounts and altering their savings habits. Once you get used to saving regularly and see that money piling up, it’s easier to continue.
Have a joint account with your partner
If you and your partner are planning on moving in together, you should go ahead and open a joint account. In addition to making it easier to split expenses and divide responsibilities, this will also give you access to your partner’s financial history. This can be helpful if you’re thinking about starting a business with your partner, or if you have any other joint ventures in the future. Even if you and your partner aren’t planning on moving in together right away, you may want to open an account now so that you can split expenses. You don’t want to be moving in with your significant other only to have to go back to paying for your own utilities.
Make a budget
This may seem obvious, but you’d be amazed how many people don’t create a budget. A budget is a map of your finances. It’s not a pie-in-the-sky promise that you’ll save 40% of your income from now on. It’s a plan that shows you exactly how much you currently have, how much you’re likely to get in each major category, and what your priorities are. Create a budget by taking a blank piece of paper and dividing it into columns. Label the columns with major categories like housing, transportation, food, and entertainment so you have a clear idea of where your money is going. As you see where your money is going and which categories are taking up the most room, you can start making adjustments.
Become an expert on investable funds
You can’t possibly know all the options out there, so the best thing you can do is get a basic understanding of investable funds. There are multiple types of funds, each with its own unique features and benefits. Once you understand the basics, you can start researching more advanced funds and deciding which ones are right for you. Invest in a fund that offers a good mix of high-growth and low-risk investments. You want to make sure that your money isn’t just going to sit there and collect interest, but is earning enough to make it worth your while. You can also choose a target date fund that will automatically shift its investments to reflect your desired retirement date.
Don’t pay for college until you know you’ll go
You don’t want to be in a situation where you’re maxing out your credit cards just to pay for school, so you need to make sure that you’re not in that situation. Once you have a plan in place and a budget, you can better determine how much you’re likely to need. If you know that you can cover your expenses, but you’d like to have a little extra money set aside for a down payment or a unique experience, you can do that.
Jumpstart your savings by contributing regularly to your IRA, 401(k), and other accounts
By now, you’ve probably realized that having a healthy savings account isn’t just for when you’re old enough to get a job. There are many ways to contribute to your savings account, including automatic contributions to your retirement accounts. If you don’t have a retirement account that’s set up to make regular contributions, now is the time to get one set up and start making contributions. You can also contribute to a savings account or other savings vehicle such as a savings bond.
Accustom yourself to saving money that doesn’t belong to you, and this will help you resist the temptation to spend it on something less significant.
The future is unpredictable, and there is no way to know what will happen. However, you can make sure that you are prepared for any eventuality. Make sure that you start thinking about your future as soon as you graduate from high school. The earlier you take action, the better off you will be. By setting up a bank account, a joint account with your partner, a budget, and other savings methods, you can start building a solid financial foundation for your future.
Meet Faizan Qadeer, a finance enthusiast and seasoned investor with a passion for sharing his knowledge with others. Faizan has been blogging about personal finance, investments, and cryptocurrencies for over five years.