Have you ever heard the phrase ‘adulting is hard’? Well, let me tell you, it is!! And yes, adulting as in the verb form, which means to adult (basically the act of being a grown up)! Yes, being a grown up is hard. This might be a millennial thing and if so, be it, I have no shame in admitting that life can be a bit tricky at times.
So many decisions to make that could affect you right now or possibly in the future. As I went around my life adulting, I came to terms that as a young adult, I was ignorant to the world of finances. Oh, so ignorant. So ignorantly so that I have like a 1,000 credit cards and now I don’t know what to do with my life. Just kidding, I’m being extremely dramatic.
As the oldest of four sisters, I have found myself giving my sisters advice about their money because (one) I don’t want them to be in debt and (two) because they don’t know all the responsibilities that come ahead that require you to be somewhat financially stable. And it’s like the world just expects you to know everything about making financial decisions without there ever being a class taught in it. I totally would have benefited from a ‘Young Adult Finance Class’ in college instead of taking ‘History of Dance’ to fulfill the general education requirement.
Oh, the conundrum!
So, I’m here to share with you some tips that I’ve learned along the way as a young adult (sometimes, I learned these the hard way) to hopefully help you make smart decisions with your cha-ching (money).
1 Have an emergency Fund
Financial emergencies happen quite more frequently than we would like to admit. When they do happen, you want to be prepared so you don’t have a setback and have to put unexpected expenses on a credit card or get a personal loan. Make your goal to have at least $1000 as your emergency fund for starters.
If you’re like me and don’t have an extra $1000 laying around, then start putting some money to the side every month so you can reach your goal. You could need some emergency money for things as simple as going over your budget on groceries, an unexpected car or home repair, an urgent care visit, etc. This emergency fund will help out tremendously so you don’t go into debt for the unexpected. In the case that you do need to use your emergency fund, make sure to start working your way up to replace it again so you always have that emergency cushion in case life gets in the way.
2 Budget your paycheck
When I get payed, I deduct all my bills due through that paycheck period, then I set aside the amounts that I will need for necessities (gas, groceries, etc.). For example, I spend around $60 per week on gas and I get paid every two weeks so I make sure to set aside $120 for gas for that pay period. I do the same with groceries and household needs (e.g., toilet paper, detergent, etc.). As of right now, those are my necessities. Then whatever is left, you can budget it further down depending on your habits (e.g., eating out, coffee runs, outings). Then whatever is left after that, you can choose to save a certain percentage and the rest is technically your spending money on anything else during that pay period. And then you do it all over again next pay period.
You can adjust for the next pay period or month if you notice that what your budget for a certain thing is not enough. Going back to my gas example, let’s say that gas prices go up and $60 a week isn’t going to be enough, then next pay period set aside perhaps $70 per week. Whatever you set as your budgets doesn’t have to be fixed every month, you can adjust it depending on your needs and the capability to do so.
3 Don’t spend more than you earn
Live within your means. Don’t try to live a lavish lifestyle that you can’t afford. If you can afford it, then by all means, go for it. But if you can’t afford it, don’t go in debt just to be able to have or do what others might be able to have or do. This is why budgeting is important, because then you’ll have a set amount for spending. If you stick to your spending budget, you won’t be spending more than you earn.
4 If you have a credit card, just have 1 (maximum 2) & pay it off
Having a credit card isn’t a bad thing if used wisely. ‘If used wisely’ is the key phrase. You can use a credit card to start building up your credit score. Having a good credit score is essential when buying a car and renting or buying a home. When using a credit card to build credit, only use the amount that you’re going to be able to pay off when the payment is due. Pay it off at least within 2 months so you don’t incur crazy interest fees.
Credit cards can also be good to use in case of a financial emergency if you don’t have an emergency fund yet. In the case that you do use a credit card for a financial emergency, pay it off as soon as possible. If you can afford it, pay more than the minimum payment.
I would recommend to just have one credit card, two maximum. Don’t go crazy like me and accept any credit card offer that comes your way. A simple ‘no, thank you’ will do at stores when you’re checking out. Use credit cards wisely!
5 If you have loans, pay them off as soon as possible
Personal loans. Student loans. Loans are no fun. Usually the monthly payments for loans are anywhere from $200-400. That’s a lot of money coming out of your paycheck every month. I just recommend to pay them off as soon as possible. Pay more than the monthly premium if you’re able to do so.
For student loans, there are programs to help you refinance your loans to pay a lower monthly premium and ease the financial strain a bit.
And of course, if it can be avoided, try not to take out personal loans. Life gets in the way and sometimes you have to and that’s okay. My husband and I are currently paying off a personal loan that we used for our wedding, we are working hard to pay it off as soon as possible. I have personally taken out two loans on my own, I’ve already payed one off and I will be paying the other one off in January. It’s been hard since the monthly premiums are so high so that’s why if it can be avoided, don’t take out personal loans.
6 Have separate funds for future expenses
If you already have your emergency fund set, then I would take it a step further and start separate funds for things like car repairs, medical expenses, birthday gifts, christmas presents, vacations, etc. and leave your emergency fund for other financial emergencies that you don’t have separate funds for. That way you are super prepared and you’ll be killing the adulting game.
7 Check your bank accounts a couple times a week
It’s important to be aware of your transactions coming out of all your accounts. It has now become easier to be on top of your transactions through mobile bank apps. It takes me less than a couple minutes to check my accounts on my phone. By checking your accounts (including credit card accounts) a couple times a week, you’ll be able to catch transactions that don’t seem right and catch fraud in its tracks. Or perhaps you were overcharged or charged twice at a place you recently visited and that way you can correct it early on.
I rarely used to check my account until I was a victim of fraud. There were two $200 transactions at gas stations at places I had never been to. Luckily, my bank caught it. They froze my account because the transactions didn’t align with my spending habits at gas stations. I was so lucky they caught it because I probably wouldn’t have caught it until weeks later due to not checking my account frequently. This is an unlucky example of why it’s important to check your accounts and also to make sure you’re staying within your budget.
8 Get rid of stupid fees/pointless services
Check your accounts for fees or services that you’re paying for that you no longer need or haven’t found useful. The monthly fees may be so little that you haven’t even noticed or forgot you signed up for that service, but over time those little fees will add up to a pretty noticeable sum.
I was so guilty of this. For some random reason, I thought it would be a good idea 4 years ago to open up a second checking and savings account. I probably thought it would help me manage my money better, but of course it didn’t. I honestly don’t know what my thought process was with doing that.
Anyways, some banks charge you a maintenance fee if a certain amount isn’t deposited monthly. For the extra savings account, Bank of America charged me $5 a month and $12 a month for the extra checking account. That’s $17 in fees monthly. Now, multiply that by 12 months in a year times 4 years of this nonsense and I have payed a whopping $806 in fees. It’s as if I like giving my hard earned money away. No, I don’t and I’m sure you don’t either. So look at your bank statements and see what fees or monthly charges you can get rid of so you don’t overpay on a service that isn’t really useful to you. You’d be surprised how much money you’ll be saving.
9 Automate your bill payments
Automate all your bills. This is especially important for those people that are forgetful. If you forget to pay your bills on time, there is usually a late fee around $35 that you are then charged. Not to mention that being late on your bill payments also affects your credit score in a negative way. By automating your bills, you don’t worry about incurring late fees and you have peace of mind all while keeping that credit score on point, which will come in handy sooner or later.
10 Learn when to say NO when money is tight
If you’re tight on money and there’s just no way that you’re going to be able to afford that weekend getaway or really expensive dinner that you got invited to, it’s okay to say NO. This might seem like common sense, but this was a hard one for me a couple years ago. For some reason, I thought that if I turned down expensive outings, it would be as if I was admitting to being in a bad place financially. I was. But I couldn’t let the world know that.
It would be things as simple as going to the movies with all my sisters (4) and me paying for everyone’s tickets and snacks. Why? Because I was the adult that worked so I had to be able to cover this. Right? No. Or me taking my son (back when I was single) to weekend getaways staying in fancy hotels and getting all the souvenirs that we could get our hands on. For the first couple years, I was good financially so I was able to afford anything that he and I wanted to do. But when money became tight, I was already accustomed to a certain lifestyle and I had accustomed my son to that lifestyle as well that I kept it up but using credit cards instead. And it was really hard to say NO to spending because I didn’t want to come to terms that I couldn’t afford the things that I wanted.
The last two years have been such a game changer with me being more responsible financially that I can say NO now. I’ve gotten my son on board with this as well. The past two years, I have said NO to: target runs out of pure boredom, big birthday parties and had more intimate gatherings instead (we’re saving a big party for when he turns 10), San Diego weekend getaways to Sea World, going overboard on family Christmas presents, and little things here and there that just don’t align with my spending budget right now.
It’s okay to say NO. Your sanity will thank you later.
Bonus: Start saving 3x your monthly paycheck
If you’ve already done all of these things, I recommend to start saving three times your monthly earnings for future investments like perhaps a down payment for a car, house, wedding, etc. You will be so thankful that you have that money in the future as you go along your adulting journey.
I hope you found these tips useful, they are just things that I have learned along the way and I’m still learning a lot in terms of how to better manage my finances. I can confidently say now that I have made a change for the better and am so proud of how far I have come.
Let me know of any other tips you recommend to better adult financially in the comments below.