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Sign-InEntering adulthood gives you a sense of freedom that will highlight independence and prepare you for the real world. Making smart financial decisions will create good money habits that will set you up for the rest of your life. Here are ten ways to build financial independence.
Start Early
Start learning about financial literacy early on, and a great place to start is at home. Ask your parents to show you how they manage their household budget. You'll have the opportunity of learning financial moves like budgeting, investing, and safely monitoring your money, as they apply directly to your life.
Open Checking and Savings Accounts
Saving your money in a piggy bank may be effective when you are a child, but as your approach adulthood, you'll need a safer ways to grow and protect your money. Many savings and checking accounts offer protection of the money you've deposited through federal insurance and various cybersecurity measures.
Learn how to budget
Creating a budget helps you manage your spending and will be a guide to make sure your savings are on track. Creating a budget can help you set long-term goals, like buying your first car. You will thank yourself for having savings when an emergency comes up.
Learn about credit scores.
A good credit score will help you save money in the long run when you are ready to apply for your first loan. Individuals with better credit scores tend to get better interest rates on loans and insurance premiums. Different factors impact your credit score, including; payment history, the amount of debt you owe, credit length, new credit, and credit mix.
Learn how to invest
Investing is a smart way to put your money to work. Spending thousands of dollars in the stock market is not the only way to make investments. There are different and less risky ways to invest, like purchasing a certificate of deposit (CD). A traditional CD allows you to build wealth without taking risks and learning market trends.
Land your first job
Landing your first job will help you understand personal finance. Working builds your self-esteem and creates responsibility. Plus, it will be a nice feeling when you do not have to ask your parents. Having a job as a teen also will look good on future applications compared to individuals with no experience.
Learn about ways to recover from financial mistakes.
No one is perfect; we all make financial mistakes. Recovering from a financial mistake requires identifying the cause, so you can prevent it from happening again in the future. Overspending is not the only way to make a financial mistake. Making a bad investment or missing a credit card payment can set you back with your credit score or cause you to gamble your money away.
Wants vs. Needs
Start understanding the difference between wants and needs. Not all wants are a challenge, and you can get in trouble if you act on your wants versus your needs. Wants can be an overpriced vacation, a fancy car, or even a cup of coffee- depending on your budget and what you can afford. Needs are the essentials that you need to survive, like food and shelter. Always cover your needs before committing to other expenses.
Stay up to date on technology and cyber security.
In today’s world, technology is all around us. Learning to access your checking and savings accounts online will save you time and energy when following your financial plan. When accessing your online accounts, make sure you are practicing cyber security practices. Hackers can gain access to your financial information through phishing and malware attacks. Create a hard-to-guess password and manage them with password managers. Keeping your software up to date prevents hackers from gaining access to your assets.
Learn to be a leader.
Going out with friends can cost you more than money. Keep your budget in mind, and don’t get influenced by your friends when you see them overspending on their wants. Instead, be a leader and discuss the importance of saving and being financially fit. Don’t be afraid to speak up. Some of your friends may not know how to budget, and speaking up can help them learn financial habits.
Remember these tips, and you will have an easy transaction into adulthood.