Youth is about being free and learning what you like in life. While it’s true not everyone can live long without responsibility, some have others to care for or lifestyle requirements to meet, you should still have room to consider your path forward and ask yourself what’s best for you. This is your right as someone starting out in life, but don’t worry, there isn’t a perfect deadline by which to come to such conclusions.
However, it’s true that once we venture out on our own and intend to make our finances work for our own needs, some important principles come to light. For example, youth might be fun and free, but racking up debt to enjoy our daily life is only going to be a problem that bites us later on down the line.
As such, you may be wondering what financial decisions a young person can best make, despite their circumstances or help from others in their family or friendship group. In this post, we intend to offer a few simple principles to answer that question:
Photo by Artem Podrez:
Saving For Emergencies
People often say “you never know when life is going to throw something at you” but the truth is, it invariably will one day, so having money set aside for emergencies is one of the best areas of breathing room you can give yourself as a young person. It’s fine if you start in a tiny savings post, and build it up over time until you’ve got enough to cover three to six months of your basic living costs. This gives you breathing room if something goes wrong like losing your job or your car breaking down or needing to move out of a bad living situation quickly.
Try setting up an automatic transfer each month so a bit of money goes into savings before you have a chance to spend it on anything else. Some round-up savings utilities can be a massive help too.
Baseline Credit Building
Your credit score matters more than you probably realize when you’re young, because you’re not usually asking for huge loans or mortgages at this age. However, building it up early makes life so much easier when it does come into play, such as when you want to rent a nicer flat or look at property for sale or apply for a decent car loan.
Start small with something like a credit card that you use for groceries or petrol and then pay off in full every single month without fail, which shows lenders you can borrow responsibly and manage your money well. Just avoid the temptation to take out big loans or rely on pay later apps, it can affect you more easily than you’d assume.
Exploring Living Locations
If you’re unbound by people you’re responsible for, it’s worth living in a few different places if you can manage it, because you learn so much about what kind of environment makes you happy and what you need from a community.
Perhaps you think you want to live in a big city but then you try it and realize you hate the noise and the crowds, or maybe you grow up in a small town and discover you love it there and don’t need to move somewhere trendier to feel fulfilled. The opposite could be true. At the very least, now, when you can afford to live modestly, it’s the best time to explore yourself a little. Consider this a financial investment in yourself, because ironically, it can help you make better decisions later when you do make hard decisions about money.
With this advice, we hope you can feel more confident managing money as a youth.
