Get an Early Jump on Financial Literacy
As many new graduates enter the workforce or young adults get a new job, what things should they know to help them be financially successful?
Financial literacy is lacking in this country. The American Public Education Foundation’s most recent survey of financial literacy in grades K-12 reports that our country is in “crisis” when it comes to preparing our children for personal finance and decision making.
So, it is important that parents and caregivers to step in to teach young adults a few basics to help them succeed. Here are four foundational areas to address:
1. Learn to budget
A budget is a plan – a road map to help you track what you earn versus what you spend. Having a budget in place and sticking to it will help guide you toward financial success. Like sticking to a workout regime or piano lessons, it may not always be fun but practical and perseverance can lead you to positive results.
To create a budget, first write down all of your fixed expenses. These include needs like rent, gas, insurance, prescriptions, and groceries – things that you cannot live without. Then, write down all of your wants. These include items like entertainment, subscriptions and travel. Next, identify your monthly earnings and subtract your fixed expenses. If you have funds left over, you can dedicate those toward your wants. If your needs are more than your income, you will need to adjust your expenses so that you do not go into debt.
Get a grasp on student loans. Then graduate. Knowing what you need to pay off each month is a critical piece to your budget. Working with a financial advisor to determine a more advanced payoff plan is recommended if your income will allow for it.
2. Save money for the next big purchase, such as a house or car
Setting a goal of a large purchase such as a car, vacation or house and learning to save for it versus spending small amounts now, will support an understanding of the value of setting financial goals. These goals can help to create a bright financial future.
3. Don’t slack
As a young adult or new graduate you may not be 100% certain of what you want to do yet and that’s ok. But don’t slack. Update your resume and begin the job-hunting process. Talk to friends and family to gain leads that might start you on a new career path. Join networking groups and follow up on any referrals you get. You could also start a new business – that big idea you had. Write a business plan and see if it is viable. Run it by a few people to get their feedback, especially people in that field who can give you advice for success.
4. When in doubt, ask for help
Figuring things out on your own can be hard. Seek out a mentor or trusted figure to give guidance. Even if you haven’t figured out what you want to do, don’t let that stop you from trying.
Making the shift into adulthood isn’t always easy but it’s a path that we all must take. Setting yourself up for success now, and working toward your future from an early age, can help make that process a little easier.
By Rachel Caballero | TruWest Credit Union
