Basic financial strategies for young adults

financialhazeMost young adults entering the workforce are doing so with large amounts of student loans and in some cases credit card debt. At this point, they are living paycheck to paycheck. While the idea of saving money and financial planning may seem pointless at this stage, doing so will see large rewards in the future.  Here are a few strategies that will help set up your future:

Set a budget

Regardless of how little you earn, budgeting is absolutely critical. It gives you a picture of where the money you do spend goes and how much is actually coming in versus going out. Set a budget for each category of your spending and stick to it as much as possible. Some find that they spent inordinate amounts of money on coffee shops and simply taking coffee from home saved hundreds of dollars a year.

Setup review periods

Set up either twice monthly or weekly reviews of your budget and where you stand in comparison. This allows you to get ahead of any expenses that are escalating such as eating out or shopping. This establishes control and allows you to reallocate funds from other categories.

Save automatically

Most people don’t save because they have to actually have to do it themselves. Set a standing order from the bank to take a certain amount the day after your paycheck arrives. Some organizations have automatic savings schemes for employees that deduct the money and bank it. Regardless of the approach taken, automatic saving is the best way to consistently put money away.