With record inflation driving up prices and student loan debt reaching crisis levels, it’s no wonder young adults are worried about their financial futures. The fact is, the American Dream achieved by past generations seems to be moving further and further out of reach, resulting in a severe lack of confidence among today’s youth.
More than half (54 percent) of teenagers who responded to the Teens & Personal Finance Survey in February 2022 reported feeling unprepared to finance the life they hope to have in adulthood. And more than two-thirds (69 percent) said the rising costs of higher education have impacted their choice to attend college.
The study also showed more than four in 10 teenagers (41 percent) were not receiving any financial literacy education in school. With that in mind, it’s right to wonder what young adults can learn now that can impact their finances — and their lives — in a significant way.
How to make a budget and stick to it
One of the most important tools young people can use to get ahead is a monthly budget or a basic spending plan that helps track their money. Learning how to make a budget is crucial if you want to make sure you’re living within your means and saving for things you really want or need, like the down payment for a home or a reliable car to get to work.
There are several different budgeting methods that work rather well, including zero-sum budgeting and the 50/30/20 budgeting method. You can try any of them or all of them, but it’s important to find one that works.
According to budgeting expert Dasha Kennedy of The Broke Black Girl, it’s far too easy to believe you don’t need to budget, and that your financial problems can be solved just by earning enough money. However, this often leaves you spending money on “wants” without enough regard for your future goals.
Kennedy lived that way for a while until she finally fell behind on some bills and started to rethink her plan. From there, she began tracking her spending and started to think of her budget as a tool to spend money in financially responsible ways.
“Don’t let the misconceptions about budgeting cause you to make some of the same mistakes as me,” said Kennedy in a YouTube video. “All it takes is a little time and a little math to help you keep track of your expenses and your income.”
Have an emergency fund ready
Young adults should also have an emergency fund, which can kick in to cover bills in the event of a medical emergency, job loss or loss in income. Emergency funds …….
Source: https://www.bankrate.com/finance/credit-cards/what-young-adults-wish-they-knew-about-money-sooner/