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Financial Tips for Young People.

My name is Jose Eduardo Gonzalez Alvarez I am 27-year-old, originally from Tijuana B.C. Mexico.

Intro

As the youngest generation of adults, millennials have been fighting for financial independence since we came of age. With the economy and job market not what it used to be, many young people are struggling to figure out how to make it in this world. But there is hope. Once you understand your finances, you'll find more opportunities at your fingertips than you can imagine. This article will teach you everything you need to know about managing your money like a boss by giving some financial planning tips for young people.

Why it's important to manage your money like a boss

It's not easy to manage your money. Between student loans, car payments, rent, and the list goes on, it's hard to see how you'll ever be financially independent. The good news is that there are plenty of ways to make the best out of a difficult situation.

The first step is to learn about your finances and understand what you're working with. One way to do that is by creating a budget and tracking your spending. You can also save more by setting up automatic deposits and running a savings account for emergencies. This will help when it comes time to find an apartment or house when you leave home because you'll have enough saved up in case anything happens again.

If you don't want to spend all of your money on bills and basic needs, there are still so many opportunities for young people to invest in themselves and their future careers. Start with finding out how much money you're taking in each month and making sure that it's enough for everything else, like school or living expenses. Once you know where all your money is going, start thinking about saving for the future and investing in stocks or funds that could provide financial stability in the long run.

Understand your spending habits

The first step to managing your money is understanding how you spend it. Your spending habits will give you a better sense of where your money goes and what you need to budget for in the future.

Keeping track of your expenses will help you get rid of the cash you don't have to spend, plus have a more accurate idea of how much money you actually have. In fact, many people report that this habit alone helps them save more because they know exactly what they have left to spend at the end of the month—and where they can cut back if necessary.

If you're not one for keeping a written ledger, there are plenty of online tools that make it easy to keep track of your expenses. My Spending Plan is a free budgeting app that lets you input all your purchases and then tells you how much money you'll have left over at the end of the month. It's very helpful when trying to make decisions about whether or not something is worth buying!

Create a budget

Are you wondering how to budget? Creating a budget is probably one of the most important steps to managing your money. A budget will show you where all of your money has been going, so you can easily see where it went wrong.

To create a budget, take the time to write out what your expenses are, no matter how small they may seem. Then list what income you receive and calculate how much you have left over at the end of each month.

After that, break down your expenses into two categories: fixed and flexible. Fixed expenses are those that stay the same every month, like rent and utilities. Flexible expenses can change from month to month, like groceries or gas.

The next step is to create goals for yourself that go beyond just spending less money or saving more of it up for now. Set goals such as sticking to a specific set amount for flexible expenditures (or even better, using cash). Once you put your goals in place and stick to them, you'll find that there's more time for everything else in life – work, school and fun!

Calculate your take-home pay

One of the most common mistakes people make with their finances is not knowing how much they will be making. As a general rule, if you're renting, you can add 30-40% to your monthly rent and use that as a general guideline for living expenses. If you're buying, calculate your mortgage payment and then add an additional $500 per month for living expenses.

The more accurate calculations you have in front of you, the better off you'll be when it comes to budgeting and saving for emergencies.

If you're in school and don't have a job yet, start thinking about how much your student loans will be after graduation. If you want to live with roommates or share an apartment, know what your share will be upfront before signing anything. When it comes time to buy food and clothes, subtract the amount from your take-home pay before spending any money on these items.

Knowing what's coming in and out of your wallet day after day is imperative to making sound financial decisions.

Shop smartly and manage your credit cards

As a young adult, you're going to be faced with a number of financial decisions. One that's often overlooked is how much to spend on groceries, clothes, and going out.

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The best way to figure out how much you can afford to spend is by figuring out your monthly income and what bills need paying.

Start by listing all your fixed expenses—things like rent, utilities, car payments, student loan payments, groceries. Add up what those things cost for one month and divide them by 4 so you know how much they cost each month.

Next list your variable expenses—things like entertainment, clothing purchases, and dining out. Figure out the average amount you spend on these items per month and then divide that total by 4 to find the monthly costs of these things.

Once you have both lists together, subtract your fixed expenses from your variable expenses as well as any other necessary monthly payments (car insurance payments or credit card payments). The number left over is the amount of money you have left over every month for discretionary spending on clothes or going out with friends.

In addition to saving money with smarter shopping habits and managing your credit cards wisely, it's important to plan ahead for emergencies too. That means making sure you

Get a savings plan, or start one

If you're young, it can be tempting to spend money on things that don't matter. But there's a better way: Save your money and invest in the future.

A savings plan will help you prepare for the future and set aside money for emergencies or opportunities you may not have considered before. You'll also find that the discipline of saving is good for your budget and helps keep spending under control.

Having a savings plan can be just as important as having emergency savings in your checking account. It's an essential part of any financial plan, but especially one geared toward millennials.

The best way to get started is to start small, even if it's just $5 a week. Once it becomes habit, you'll naturally bump up the amount by $5 each week until you reach your goal.

Manage your debt repayment

One of the most difficult things about being a young adult is figuring out how to repay debt. It can be overwhelming to have so many different loans, so it's important to figure out which ones are more important than others.

Start by listing your loans in order, from the smallest to the largest balance. Next, prioritize which ones you need to pay off first. You might find that some of your loans have a lower interest rate or that one is already paid off. When you're prioritizing which debts you want to tackle first, it's important not to focus on the amount of money owed but on how much you'll save in interest if you pay them off now.

Debt repayment doesn't happen overnight; even though priorities are important, make sure not to neglect other debts while working on one loan at a time. For example, don't forgo car payments because you're paying down your student loans; make sure they're both paid on time! However, if there's an option between two loans with similar balances and rates—say $1,000 versus $2,000—you should consider tackling the smaller one first before moving on to the larger one.

Invest smarter with these tips

A lot of people don't think about how to invest their money until they have a lot of it. But, this is an important step in saving for your future.

The first thing you should do before investing is research different investing options. There are many ways to invest your money, but not all of them are the same. Some methods like real estate or stocks can take more risk than others like bonds or CDs (certificates of deposit).

Once you figure out what kind of investment you want to make, make sure you know how much work is involved. Some things will require more time and attention than others, so it's important to know what you're getting into before you make any major decisions. Another way to figure out if an investment is right for you is to compare it with other investments and see if one will give better results over the course of time.

Finally, find out what factors determine if an investment will be successful. Factors can include how much risk there is or what the return rate would be on that particular investment type. You should also consider whether or not there are products that could help protect against losses in case something goes wrong with your investment.

This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.

© 2021 Eduardo Gonzalez

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