Are you one of the many millennials in the workforce? If so, you are like so many of us who went through school and in most instances no one taught us how to manage money. In fact, only about 17 states require students to take a personal finance course while in high school. And of those 17 states only about five require that tests be administered on the topic taught. But when it comes to money it is better to learn from someone else’s mistake rather than making your own. The following are some tips that might help you or anyone really in the world of finance as well as live in general.
The first tip is to get a college degree of some sort. I know you have dreams of being the next great ball player, but it never hurts to have a backup plan. Besides even if you are one of the few who make it as a professional in sports that does not last forever and at some point you will need to take control of things. College is a major investment of both time and money, but it is one that is well worth it regarding enhancing your earning power later in life. And if your parents cannot help you with college consider loans and always apply for scholarships. As a rule of thumb do not get to into debt with college loans as they will at some point have to be paid back. And if you are considering college and are on your own with the finances of the education consider a community college for the first two years. They are cheaper and will save you some money over the long haul.
Also, it is easier to get your degree when you are younger. That is because you do not have a family to support, a house to pay for, children to raise, and all of the other aspects of an adult life that are missing when you are younger. And after you have the degree your earnings will increase substantially as compared to someone who does not have a degree.
Do what you are good at in life. This means if you are good with numbers you may want to consider a field of study and then work that is intensive on the numbers aspect of things such as an accountant. If science is a subject you struggle with it would not make sense to go into a field that relies on science as that is a weakness of yours and not something you will most likely enjoy doing. Remember, your job is a major time-consuming portion of your life so why not do something that you enjoy.
As I have said on many occasions, it is never too early to start planning for your retirement. And yes that means if your first job has a 401(k) take full advantage of it. Money that is able to compound of 30 or 40 years will be worth much more than the money you contribute later in life. And if your job does not have a 401(k) make contributions to an IRA in place of the 401(k). And that is for the same reasons, money compounding over a longer period of time will be worth much more than a larger sum contributed at a later point in time. If possible set this system up on an automatic investment cycle, so you do not have to think about it or even see what is being done. And when you are able it is a good idea to save at least 10% of your income and ideally 15%.
You need to place value on your money. Everyone knows that money is valuable, but you need to put things into perspective when making purchases. If you make $20 an hour, and something costs $300 you will need to work 15 hours or about two days to pay for it. But when you consider you have taxes and the such on your income it is more than 15 hours that it will take to pay for that item. Only you can decide if it is worth your time and money and that is something people do on a daily basis.
Use credit cards with care and always pay them off every month. Nothing will put you behind the eight ball faster than high-interest credit cards that you carry a balance on. It is imperative that you pay your credit cards off on a monthly basis and keep yourself out of that debt trap. It will help you to save money and keep you on a financial path that will be beneficial to you and not the financial companies.
Always treat people as you would want to be treated. While not a financial aspect of things it is good karma. You will have a better life if you treat people good and with kindness as that will be returned to you as well. Avoid gossip at the workplace and be friendly with everyone, even if you do not like them make sure they never know that.
Prepare for the unexpected at all times. It is inevitable that at some point in your life things will not go your way and it will cost you money. That is why it is important to have an emergency fund and savings to pay for these unexpected events of life. Nothing is perfect, and life is no different so be prepared for your car to break down or the house needing a new roof. These things happen to people all the time, and they will happen to you as well. The key is to be prepared and ready for such events.
And finally, learn about finances as they pertain to your situation. Investing is not rocket science, but it does take some research and work on your part. At first, I recommend investing in one or two low-cost exchange traded funds that follow an index such as the S&P 500. These are fairly diversified and will serve you well as far as investing goes. Even the great Warren Buffett does not recommend trying to beat the markets and advocates for indexed funds. And if you are not comfortable with making investment decisions then hire a qualified professional to assist you. I would recommend a fee-only financial advisor that is paid an hourly rate to assist you. They will serve you well and save you some money, and many advisors that work with assets under management require a certain amount of investments before they will take you on as a client.
While there is a lot more that can be discussed with regards to people and finances, these are some good starting points that will assist you in taking control of your finances yourself. If for some reason you need assistance or have any questions feel free to contact me or leave a comment.