When we were young we had little to no idea at all about how money worked. We just asked our parents for our allowance, watched them pay bills, and ushered them to the toy store cashier. The moment we became adults and stepped into working society, we were hit hard by the harsh reality of money.
Money is valuable. It possesses a unique position in our society, wherein it can be both a negative and a positive aspect to our lives. It’s hard to admit, but our generation has a loose grip on the value of money. We have no education about it.
A survey conducted by George Washington University suggested that only 8% of their respondents are financially literate, while the rest were just financially confident. Statistics even implied that individuals aged between 20 to 24 years old were financially declining by 41 percent in comparison to the previous generation. To combat this impending and prevalent issue, here is some financial advice that can help young adults achieve financial success.
Learn the Art of Self-Discipline
Not everyone is lucky enough to be taught about how money works, but learning it is never too late. Developing healthy financial habits is the key to a successful financial future. Learning how money is earned gives us the ability to value every last penny we have.
Knowing when and how to spend keeps us from depleting our bank accounts. Budget awareness gives us direction and is an inevitable lesson. You can start by tracking your cash flow, and know how much and when your money comes in.
From there, list your expenses, know which ones are priorities, and establish the difference between a want and a need. Create a spreadsheet that encompasses all this information. You will then be able to create a well-thought budget. Always rethink your spending.
Start saving, start early, and better yet, start now. This is probably the most common term you will hear when talking about finances. Saving is an important aspect in finances because it keeps you from spending, and allows you to accumulate more money, plus it gives you a head start for your retirement.
This habit makes you ready for any financial hiccup or accident. It is better to learn to be comfortable saving money rather than spending money. If you are struggling with spending, I suggest you watch “Confessions of a Shopaholic.” It might give a little more insight on shopping habits.
Know How Credit, Debit, Loans Work
Being knowledgeable about how money works includes knowing about how credit, debit, and loans work. All these are part of a financial ecosystem ran by monetary institutions. A debit card is a payment card that can be used to pay for your purchases. The funds directly come from your bank account.
A credit card on the other hand is a card issued by a bank with a certain limit or amount that a cardholder can borrow. They also help you rebuild your credit quickly. There are many types of loans.
A few of them are student loans, housing loans, and even auto loans. A loan is money lent by an entity under the impression that it is going to be used for a specific purpose.
Know Your Cash Flow
Since you are aware of the right habits and the importance of saving, now you need to learn your cash flow. Cash flow is the movement of your money; how it gets in and how it goes out. When you are well aware of your cash flow, you will be given a clearer view of your finances. You will know the areas where you can cut costs, and the areas to focus on. You can make better financial decisions when you are aware of your cash flow.