By all accounts, college graduates are leaving school and entering the real world lacking a sufficient amount knowledge in how to handle their finances. The good news? You haven’t screwed up yet. And if you follow a few broad, yet basic guidelines, things might just stay that way.
After a recent report from Finra’s Investor Education Foundation revealed a few worrying statistics about personal finances in the U.S. (19% of Americans spend more than they earn), Fox Business reporter Emily Driscoll consulted experts to inquire, generally, about one thing: What can young people do to better manage their money?
“When you take into consideration the financial turmoil many have faced in recent years and the future of Social Security, it is wise for younger generations to start saving early and thinking about their finances,” finance expert Kimberly Foss told Fox.
The first bit of advice given to young spenders is to create a budget that catalogs prospective savings and costs.
“You will quickly learn where you spend the most money and what you value financially–are you a person who makes impulse buys or do you research your purchases?” said Chanel Green, the manger of financial aid at Peirce College. “This type of trending becomes valuable when the student is trying to determine if they need to keep spending in check, how well they manage their money and if there are areas where they can improve their budgeting skills.”
It may sound like common sense, but it is nonetheless an important tool to help people avoid the type of spending that those in debt come to regret. And so is the use of a savings account, as well as a consistent system to abide by while putting money away.
“Deposit whatever you can initially, and then aim to contribute 15% of your take-home pay to the fund monthly,” said Foss.
Of course, if you don’t feel motivated enough to use these simple methods — which could, lest we forget, save you much trouble in the future — you could just ask your indebted elders about the type of things they did to land themselves in financial misery.
“They might be able to tell you these are the mistakes we made because we did not start soon enough, so you may be able to learn the great things they’ve done and the things they wish they would have done,” said Dave Richmond, founder of the wealth management firm Richmond Brothers. “You can either step in the potholes that everybody steps in or you can learn to avoid them–it’s much easier and less painful to learn how to avoid them.”
