For quite some time, I have noticed that many young adults do not have a strong knowledge base for basic financial planning. This is not a big surprise as most students in college are not offered financial course work unless it is a requirement of their major. Parents do not always teach children about healthy spending – perhaps they themselves do not have the skills to lay the basis for healthy spending and financial planning.
There are traps and land mines everywhere you turn. Technology, 24/7 media access, and social media would have us believe that an average lifestyle includes travel, vacations, sporting the newest fashions, and driving the hottest car. Don’t believe it. Comparing your life to social media is like comparing a highlight reel to the cutting room floor. We don’t see many posts about bills or debt levels.
So where do you start? A few quick tips to remember:
- Understand your cash flow. Where is your money going each month?
- Pay yourself first – before you spend. Set up a monthly amount to go into savings.
- Avoid consumer debt. If you cannot pay for it, save and buy it later.
- Understand the cost of owning a home before you purchase. Utilities and insurance plus repairs such as a new roof, HVAC and other unexpected expenses should be expected.
- Have an emergency fund of at least 3 to 6 months of your expenses.
The good news is that this same technology offers numerous resources to make it easier to get a handle on expenses and begin putting finances in order. Financial apps for smart phones can help individuals make progress. For creating and managing budgets and finances, here are examples of a few specific tools:
- Mint – allows users to upload account information and get immediate insight into where their money is going. Free and user friendly and comes with a smart phone app.
- Get Pennies – an iPhone app that shows your spending and finance health with bold colors and easy to understand graphics, helping you slow down or speed up to help you stay on track.
- Pay Off Debt – an app designed to create and use a debt snowball to focus your debt reduction efforts. Available for Android and iPhone.
- Budgetsaresexy.com – sometimes referred to as “the Miley Cyrus of finance,” this blogger aims to help young people pay attention to their money.
- You Need a Budget – A software and mobile app that helps sync accounts, and create categories for spending. Instead of deciding to buy something based on the big (or small) pile of money in your checking account balance, you decide based on a category balance.
- Your Bank – most every bank now offers online banking and budgeting to help track spending.
In addition to simple apps, there are more blogs than we have room to cover, but a few worth checking out are:
- Feed the Pig – Goal is to help young adults aged 25 to 34 to take control of their personal finances. Includes budget calculators, home budget analysis, and budget templates.
- Thousandaire – Translating financial and investment concepts into plain language and helping regular people make informed decisions about what to do with their money.
- The Muse – A collection of articles on money and finance.
- MoneyNing – A personal finance blog that shares insights on carefully saving money, investing, frugal living, coupons, and promo codes.
- Young Adult Money – A personal finance and lifestyle blog focused on helping those in their 20s and 30s to make more, save more, and live better.
- The Debt Movement – Tools and tips for getting out of debt.
- Get Rich Slowly – Collection of finance and money articles from multiple sources.
If you are a bit further along and want to learn the basics of investing, or how to be smart in exercising your choices in directing 401K funds, you could follow The Wallstreet Journal, USA Today, CNN, or other media companies that devote significant resources to reporting on finance. National Public Radio’s Marketplace broadcast is creative in its approach to financial topics, with a robust Twitter feed and good web archives.
Asking a financial planner to assist you in understanding the basics is always helpful. For this reason, Bridgeworth, is offering Financial Planning 101 for young adults or anyone starting to make financial decisions, plan for their future, or simply interested in the basic rules of money management. The class will be Tuesday, July 21 from 5:30 PM to 6:30 PM in our Birmingham office.
The internet is a powerful and vast source of information and resources, but it is sometimes hard to spot the wolf in sheep’s clothing. A benefit of working directly with a financial planner is you can be assured that the client is you, not someone like you. NBC television runs a public service campaign series, “The more you know,” and when it comes to personal finance and budgets – the more you know the better.