Turning 18 is an exciting milestone in a young person’s life. When I turned 18, I was like I am now an adult. Learning to manage your finances wisely in your early adult years can prepare you for a bright future, both financial and otherwise. These tips can help you avoid common money mistakes people make when they’re just entering adulthood and allow you to comfortably enjoy all life has to offer now and in the future.
- Open checking account
Here is what to look for in your first bank checking account:
- Fees: Look for a checking account that doesn’t charge monthly maintenance fees, ATM fees, or overdraft fees.
- Online banking: Look for a checking account that offers robust online banking features, including the ability to manage your account, transfer funds, and pay bills online or through a mobile app.
- Customer service: Choose a bank that offers reliable customer service, both online and over the phone. This can be especially important if you encounter issues with your account.
- Rewards programs: Some banks offer rewards programs that allow you to earn points or cash back for using your checking account. If this is important to you, look for a checking account with a rewards program that fits your needs.
For more information about how to use your bank account, I made a blog post all about banking http://dorianfinance.com/banking-101
- Create a budget and stick to it
- Track your income and your expenses.
- Balance income and expenses with the idea being that you spend less than you earn.
- Try both Methods to budgeting use a notebook or use technology.
Try the 50/30/20 method
50% on necessities like gas, rent, food, credit card payments and other debt, etc.
30% on lifestyle choices like getting a gym membership, eating out, and going out with friends. 20% on savings.
You can also try the FIRE method of retiring early by investing 50% of your income and keeping all expenses low.
For more information about how to make a budget, I written a blog post about it http://dorianfinance.com/how-to-make-a-budget
- Get a job or create a business
For my kids, I will have them start businesses younger than 18 because they have more time to teach it. I think having a part-time job is a great way to teach what you want to do with your life.
There are many benefits to getting a job when you’re young:
- Learn important people skills and how to work with others.
- Build and understand solid work ethics.
- Determine the type of work that best suites you.
- Start building credit
This can be a trap for most people so make sure you talk with a financial advisor at your bank. They will help you understand how to start building your credit. I find that most business have their own starter card. Try to use your credit card like it’s cash and DO NOT spend it on stuff you do not need. If you do everything correctly you will have a good credit score so after college you can buy your own house.
For more information about how to pick a credit card, I made a blog post http://dorianfinance.com/how-to-pick-a-credit-card
- Start investing
Think of starting to invest like going to college that the first 4 years you do not make any return on your investment. You are just learning about how to make money with stocks, bonds and other investments.
For more information about how to invest http://dorianfinance.com/how-forex-trading-works
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