While not everyone can be a financial expert, there are a few smart money moves that everyone should make. For young people in particular, starting the right money habits can make a huge difference. Here’s a look at some of the most essential tips for a healthy wallet.
8 Smart Money Moves for People Under 30
- Pay debt: Paying down your debt is one of the best investments you can make. Once you get a job out of school, don’t let consumer or student debts Start paying off these burdens before the interest rates eat up too much of your income.
- Build credit: While it’s wise to avoid consumer debt, it’s also important to build credit while you are young. Get credit cards and use them wisely. Pay off your credit cards in full each month to help you build credit without risking debt issues.
- Insurance is worth it: Health insurance can be expensive, but with the extreme cost of some healthcare, you can’t afford to go without it. In addition to risking massive emergency expenses, being uninsured will also cost you a tax penalty.
- Live within your means: It can be tempting to buy that bigger TV or get drinks at that expensive bar, but if you regularly live beyond your means, that’s a recipe for financial trouble.
- Invest in opportunities: One area where you shouldn’t be afraid to spend money is your future. Invest in education, training and other skills that will help you succeed in the future.
- Eat at home: You might think that drive-through meal isn’t so expensive, but if you regularly eat out, it is going to make a serious dent in your budget. Learn to cook simple meals at home, and your wallet will thank you for it.
- Create an emergency fund: You need to plan for an emergency, or else one accident can put you in serious trouble. Make sure to save a lump sum to protect you from a car repair or a high copayment on medical bills.
- Start retirement: It might seem early to save for retirement in your 20s, but with the way that investments can compound over the years, this is the most effective time to start putting away money. Even a seemingly meaningless sum of money can amount to a lot by the time you are ready to retire.
Smart money management can be tough for young people, who might not be as financially secure as older Americans. However, by starting these good habits now you are setting yourself up for a bright financial future.
Kevin D. Judd is a DC bankruptcy lawyer who fights passionately to provide his clients with a gateway to financial freedom.