When you’re starting out, there really isn’t anyone teaching you how to manage your finances. This often leads to financial struggles throughout life. It doesn’t have to be that way however. In this article, Freedom Financial shares several personal finance tips to help 20 somethings get their financial house in order.
Keep Tabs On Your Finances
It’s one thing to have an idea of what’s going on with your finances. But actually seeing it is a whole other ball game.
There are lots of ways to keep track of your finances with all of the mobile and desktop apps available. These apps will allow you to sync with your financial institutions (banks, credit cards, auto loans, etc) and pull in their data for your accounts. From there, you’ll have an accurate daily picture of what your financial life looks like.
Freedom Financial says to not be shocked if it isn’t the picture you want to see. The first step in improving your financial situation is recognizing you have one.
A Budget Can Change Your Financial Life
That might sound like an overreaction but it isn’t. Freedom Financial mentions that once you recognize that your finances are mess, the next step is to create a budget.
Using a finance app, you can categorize your spending. Now you know how much your spending and on what. There’s definitely some things you can cut out. Identify what those are.
Next, put a monthly spending limit on each category. One app that can help with this type of budgeting is You Need A Budget (YNAB). YNAB restricts you to spending only money you have. Once you are paid, you assign those dollars to specific spending categories. If one category increases, you can reassign money to it. YNAB also claims that on average, new budgeters save $200 in their first month.
When it’s time to buy groceries, make a list before you head to the store and purchase only what’s on your list. This will keep you from making impulse purchases.
Free Checking Accounts Really Do Exist
There’s not much reason to pay a fee for a checking account. Banks collect fees in plenty of other ways so paying monthly just to keep your money with them should not be part of your financial plan.
Freedom Financial mentions that there are plenty of free checking accounts that don’t even require a minimum deposit. Some will also waive ATM fees.
For a list of checking accounts, check bankrate.com.
No Credit Doesn’t Mean No Credit Card
Credit cards are a great way to build credit. One misconception when you’re starting out is that you can’t get a credit card unless you have credit. That simply isn’t true.
One option is to get a secured credit card. These cards require a deposit and limit your spending to the amount of the deposit. Using this type of card will help build your credit since it is regularly reported to the credit bureaus. After a few months of using the unsecured card, you will usually have the option to convert it into an unsecured credit card.
Another option is to be added to your parent’s credit card. Your name will show up separate from their name. Check with the credit card company first about any fees and to confirm how they will report your credit.
If you are struggling with getting your debt under control, visit Freedom Financial at freedomfinancialnetwork.com to get help today.