One of the big hurdles to moving into comfortable adulthood comes with the territory of money. You want to gain financial independence as soon as possible, but the methods to do this can be a little murky if you don’t understand how a few cash basics work.
So five tips to give you gentle nudges in the right direction of responsibility are going to include decisions about your first credit card, how to set up budgeting software, making it a point to understand debt before you accrue any, making sure you set up a savings account, and understanding the process for establishing credit slowly but surely.
Your First Credit Card
When you get your first credit card, it’s a huge step in the right direction concerning financial independence. As soon as that card is signed and in your hand, you have a tremendous amount of purchasing power that you can harness. But, if you want to keep that ‘independence’ part of the equation set, you have to plan on paying off your balance every single month. Leaving any kind of a balance means that you’re chewing into money unnecessarily.
When you take the time to install budgeting software on your computer or phone, that’s a sign that you’re being responsible as well. If you check your budget and transactions every week, or maybe even every day, then you can make sure that your spending doesn’t get out of hand. It’s the people who only check in monthly that can be surprised by their spending habits to the point where they suffer consequences of not having enough money for things like bills.
Understanding Debt In Advance
Just understanding debt and interest rates is a big part of moving toward financial independence as well. If you have any kind of a loan that you had to take out, for school for instance, then knowing what the rate is, and how long you have to pay it back, will be essential for you to use the rest of your income responsibly.
Getting a Savings Account
Right when you begin establishing yourself as an independent adult in the financial world, you’re going to want to set up a savings account. This is a separate account that you put money into that there’s a specific reason it isn’t to be touched for normal bills and purchases. It can be used for an emergency, but otherwise it’s only there for long-term stability.
Establishing Credit Slowly but Surely
If you start out slowly using credit, and make sure to pay it off every month, you’ll see a gradual increase in your credit score. That credit scores will be used later in your life to determine the amount of money that you can take out in loans, or even where you can live with respect to certain apartment complexes or living situations. Independence, here we come!