Finances can be one of the most difficult things to manage when you first move away from home and you’re on your own. There are a lot of reasons for this. People often aren’t taught much about money when they’re growing up, and once you head off to college or you’re working your first job, you have a lot of other things in your mind. In fact, it could be a few years before the bad decisions you make now really come back to you. That’s all the more reason to start making smart financial choices now.
Have a Budget
It’s neither glamorous nor fun, but it is necessary. Making a budget has a few different components. First, you need to figure out how much money you have coming in and how long you need for it to last. Then, you need to figure out what your expenses are. This can be easier said than done, and it may help to get an app to track and categorize your spending. With a budget, you’ll always know how much you have to spend on things like food and entertainment and can avoid overspending in any one category.
Pay for School
If you’re a college student, how to pay for school is probably a big concern. You may have some savings from your parents and some loans, but the problem with loans is that you have to pay them back. Don’t just take out loans because you assume you aren’t eligible for scholarships. There are a lot of scholarships out there with a variety of eligibility criteria. In fact, you may find it helpful to use a free scholarship search and application platform. This can make the process fast and easy.
Have Emergency Funds
This is a way to protect your personal finances and another critical element of being financially responsible. One reason people tend to get into debt or struggle to get ahead is because of unexpected expenses. These might be things like car repair bills, vet bills and out-of-pocket medical expenses. If you have a fund set aside for these things, you can easily absorb them into your budget and replace the money later. Emergency funds are also important in case you don’t have income for a while. The general advice is to have at least three months of expenses in your emergency fund, but many people aim for six to twelve months for added security. If there’s no way you can build up more than a few hundred dollars, that still puts you in a far better position than people who have nothing at all.
Avoid Credit Cards
Credit cards are not a universal negative. They can be good for building a good credit score and for the perks that they offer. However, it can be too easy to deal with emergencies or impulse buying by whipping out your credit card. While in the moment it can feel like the payments will be painless because they are spread out over time, the fact is that the interest can grow quickly and leave you struggling to pay.