There are some skills in life that we all need in order to get by. Which ones can you think of?
Some are really obvious, such as cooking, personal hygiene, and communication. Skills like cooking and personal hygiene help us survive and to live our live as healthy as we can. Whereas the other kinds of skills, such as communication for instance, help us to get by and improve the person we turn out to be. Not only that, though, but they increase our employability and make it a lot more likely that we will end up earning the big bucks!
Even though most of us will graduate from college with a good set of skills on our resume, there is still often one skill set that is usually lacking from most graduate’s knowledge. And that is a solid set of financial skills. Without any financial knowledge and skills, it can be incredibly difficult to manage money. As a result, you might find that you are a lot more inclined to overspend and end up collecting a lot of debt and poor credit. Because of this, your financial situation will not be too strong at all, and this could have a knock on effect when you need to apply for other forms of finance, such as mortgages. Your poor financial situation won’t make you an attractive candidate to lenders, so you will find that you are quickly refused.
Do you think that your financial skills could do with a bit of work? Don’t worry; that is where this blog post comes in to play. I’ve outlined some of the key financial skills that every young adult needs. I’ve also included some extra information on how you can improve the skill. So, ready to get more knowledgeable when it comes to your money? Read on to find out everything you need to!
First of all, you need to make sure that you understand all of the basics of budgeting money. That way, you will know how to look after what you have in the bank and you won’t risk spending too much of it at once. I know that lots of young adults are currently put off even thinking about starting a budget as they think that it will become a lot too complicated for them. But that isn’t the case – your budget will be as complicated as you make it. So, when you are just starting off, it’s a good idea to try and keep it as simple as possible. You’ll be able to find lots of great budgeting tools and templates online to help you get started on yours.
Separating Want From Need
It is also critical to be able to separate wants from needs. This is usually one of the very first reality checks that we all get when we move out into our own place and become independent. After all, your needs will no longer be the responsibility of someone else, and you will have to ensure that your wants don’t get in their way. Otherwise, you could end up missing out on being able to pay some pretty important needs, such as rent and food bills. Lots of young adults who have only just got their own independence often take a while to figure out the whole wants vs needs thing. They continue to put their wants before their needs which can worsen their financial situation very quickly. So, make sure that you are very aware you are going to have to make some difficult choices once you get your own place. Or else you might find that you start to spiral into debt!
Saving For Emergencies
It’s also important to save just in case of emergencies. There is no way what roads our lives will take or when we might face turbulent times. So, it’s always good to have plenty of money in the bank that you can use as a safety net. For instance, you might end up in a bad accident or develop a serious health condition that requires you to pay some very high medical bills. Plenty of savings allows you to do that while also being able to fund your current lifestyle. Even if you aren’t on a particularly high wage at the minute, there will still be some ways you can try and boost the little that you can save. Ideally, you need to be paying into a savings account at least once a month. Even if it is just $10 to start off with, that will still add up to a sizeable sum eventually. As well as that, you should look for a high-interest bank account. Most specialist savings accounts come with high interest rates and will help you grow your savings over time. Once you do start to amass a sizeable sum of savings, you should start to consider investing them in stocks and shares. That way, you will make even more money as investments are a lot more volatile and have the potential to grow substantially.
It also helps to be able to estimate well. That will help when it comes to applying for big loans and large sums of finance from creditors. If you are able to estimate correctly how much cash you will need then you will be able to apply for a suitable amount of credit without taking out too much. If you do ever overestimate how much you need, then you could really struggle with the monthly repayments. Thankfully, there are some online tools, such as this mortgage calculator, which can really help you with your estimation efforts. These different online estimation tools will come in super useful and can take out some of the hard work that comes with doing all the sums in your head. But it’s also a good idea to try and develop your own estimation skills so that you don’t always have to rely on online tools!
How To Read Financial Contracts
When you grow up and move out into your own place, you will be responsible for taking out any loans that you need, signing for a new house, and other boring monetary contracts. Even though these may seem like very boring pieces of paper, they are actually very important and are legally binding. So, it is absolutely crucial that you always understand exactly what it is that you are signing for. Otherwise, you might end up signing away your life without even realizing it! Unfortunately, the companies and lenders who you sign with won’t be too bothered if you don’t really understand what you are reading and will make you sign even if it is clear that you don’t have a clue what you are signing for! So, do your research and make sure that you know how to read any financial contract that comes your way. Believe me, this is doing future you a huge favor as it means that you won’t ever have to worry about getting into any legal trouble. If you are faced with a contract and don’t really get what any of it means, don’t feel pressured to sign it there and then. You can always take it with you to show your parents so that they can give it a quick once over. Alternatively, you could even take it to a legal expert for their two cents.
Knowing When To Ask For Help
We all run into trouble at various points in our lives and sometimes the only way out of these tricky situations is to ask for help. It’s really important that you know when you should ask for help with regards to your financial situation. After all, running out of money is a pretty bad place to be in. Thankfully, there are lots of different places to turn to for help. If you are on good terms with your family, then they should be your first port of call. They might be able to offer you some useful tips and advice. If things are pretty bad for you, they might even be able to offer you a loan to tide you over. If you can’t turn to your parents for help, then you should go to a financial advisor. They will be able to professionally assess your situation and give you some advice as to the best way of tackling things.
How To Prepare For The Future
Even though you may still only be young right now, there is no reason to put off planning for the future. As soon as you are in full-time employment or have some other source of regular income, it is crucial that you start paying into a private pension. That’s even the case if you have a workplace pension set up by your employer. You will then be maximizing your savings ready for retirement and will be ensuring that you can enjoy a comfortable retirement.
As you can see, there are a lot of financial skills that you need as a young adult. Best start learning them now!