Many young people are caught in the spiral of getting their paychecks and immediately blowing it all on dinners, brunches, new gadgets, coffee, and other unnecessary things. They are so excited to spend their money even before they get their hands on it.
This spells a bad future for the young people of today – if they won’t stop to save and invest. What happens to them if they keep on working but don’t save a portion of their pay? How will they be able to prepare for the bigger responsibilities ahead of them?
If you’re a young working adult who wants to get started on building a better financial future, here are three tips.
Build an Emergency Fund
An emergency fund is a certain amount that you set aside so you have money to spend in case of an unfortunate incident like getting laid off, a medical emergency, car repairs, and other important but unexpected expenses. It’s suggested that you need to set aside three to six month’s worth of expenses for your emergency fund. Compute how much you spend in a month – including rent, food, and other bills. Multiply that by three to six and aim to set aside that amount, in a form that’s easily accessible like a savings account. Remember not to touch this money unless it’s an absolute emergency.
Depending on your employment status, you might have access to several types of retirement accounts you can invest in. A lot of people don’t pay attention to retirement planning. The truth is, even as young people, this is something you should pay attention to. Many older people today are left penniless in their twilight years because they didn’t prepare for retirement.
Investing in Real Estate Properties
As a young person, the thought of buying property might seem daunting to you. What you need to realize is that if you play your cards right, real estate is one of the best and most rewarding ways to invest. You can go the standard down payment and mortgage style or even consider buying property in SMSF. With enough research, you can take advantage of the latter despite the skyrocketing prices of properties these days.
The bottom line is that it’s never too early to start educating yourself about saving, retirement, and overall financial responsibility. Being financially-savvy in your young age will save you headaches in the years to come.