Many young adults struggle with finances. In fact, a high percentage of American adults live paycheck to paycheck, with little to no money in savings. At TruWest Credit Union, we know it’s never too early to start taking finances seriously and are here to help; whether you’re in need of budgeting tips or are looking for financial education, we’re here to share some budgeting tips for young adults today.
1. Track Your Spending
It’s important to know exactly where your money is going. Start by tracking how much you spend and what you spend it on. Our mobile banking app allows you to monitor any payments you’ve made and see your account balance at a moment’s notice. We offer mobile wallets for all our customers as well if you’re not a fan of carrying around your physical cards. While going over your bank statement, it’s best to keep note of the following:
- What do your needs (rent/mortgage, utilities, etc.) cost month to month
- How much you’re spending on subscription services (gym, streaming services, email-based subscription services)
- What you spend on variable bills each week/month (groceries, gas)
- How much you typically spend on entertainment
Sometimes, a look at your current spending habits will give you a better idea of areas where you may be able to cut back, ultimately allowing you to take better control over your finances.
2. Set Financial Goals
As you take control of your overall finances, set goals for what you want to accomplish. You may, for example, want to save a specific amount of money toward making a major purchase, start investing, or even simply put your money in a high-yield checking account, which can help you generate more interest income without substantially altering your current spending patterns or your ability to access your money when needed. Keep in mind that if you don’t deliberately take steps to make your money work for you, it will be more likely to get away from you.
Once you’ve established financial goals, figure out what it will take for you to get there. For example, if your goal is to purchase a home, consider how much you need to save up for the down payment and how long it will take you to get there. It’s never a bad idea to check with your financial institution if they have any home-buying assistance programs as well.
3. Utilize the 50/30/20 Rule
The 50/30/20 rule notes that, ideally, you should spend:
- 50% of your income on needs
- 30% of your income on wants
- 20% of your income on savings
If your bills exceed 50% of your income, look for ways to cut back: moving into a smaller apartment, cutting down food expenses, or taking public transit to work. You may also need to look for ways to increase your income, like picking up a side hustle or using investment tools to help launch your savings plan. If you have questions about how to improve your budget, check out the TruWest Financial Resource Center for support.
Start Saving for an Emergency Fund
Having an emergency fund doesn’t just mean that you have the funds on hand to manage a financial crisis, though that certainly provides peace of mind. It also ensures that you do not have to take out expensive loans or choose options that are ultimately more expensive. Set aside a percentage of each check toward an emergency fund to help improve your financial stability. A goal we usually recommend is around six months’ worth of expenses.
TruWest Credit Union is Here to Help with Your Financial Future
Managing your finances as a young adult can be incredibly challenging. TruWest Credit Union is here to help. We have financial resources that can help you achieve your goals, from the Financial Resource Center, which can help you make critical financial decisions, to investment solutions that can help you grow your savings over time. Contact us to learn more.
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