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No one is ever too young to start their journey to financial freedom. In fact, young adults who still live at home or who have moved out for college can lay the foundation for healthy finances later in life by developing a few key financial skills. Today’s young adults often face steep debt from their college education, and few have the resources to save for months of unemployment, making it even more important that they master their finances. Here are the most crucial financial skills they should learn.

Achieving and maintaining a high credit score

creditIn today’s world, credit scores make a huge difference when it comes to everything from apartment hunting to getting a car or home loan. With lower credit scores, people face higher interest rates and larger debt hurdles. Young adults can begin building their credit scores very early with a low-limit credit card. They can also ask to be put on their parents’ accounts to help establish credit, or parents can put their child on a car loan so that each monthly payment helps to increase their score. Many young adults today finish college with virtually no credit established, which puts them at a major disadvantage when they try to buy a car or rent their first apartment. With great credit, they can avoid needing a cosigner later down the line and secure the best interest rates available.

Embracing frugal mode

In real life, unexpected expenses arise often and suddenly. When this happens, people need to understand how to live frugally for a period of time to cover the expense, rather than going into debt because of it. The perfect time to develop this “super-saver mode” is in the early 20s, when individuals are typically not making a lot of money to begin with. Frugal mode often involves embracing public transportation, bringing homemade lunches to work, and saying goodbye to cable for a period. Young adults may also want to consider looking for cheaper pastimes and even getting a roommate to help cover living expenses. Instead of going out to eat, they can invite friends over for dinner and make it a potluck event. Living frugally does not mean doing nothing; it means having fun in new ways.

Minimizing monthly overhead

When you spend more money each month, you need to make more money each month. Since the latter is not always possible, people need to learn how to reduce their overhead when times become tight. In today’s world, subscription pricing is common. While necessities like insurance, housing, and Internet typically have monthly fees, this payment structure has transferred to many forms of entertainment. Subscriptions can prove alluring since they often takes the guesswork out of monthly expenses, but they can quickly add up to make an unwieldy overhead. Individuals need to consider what is really a need and what can be let go, which often involves some degree of sacrifice, like choosing between Hulu or Netflix, or getting rid of both and renting movies from a local library.

Learning how to cook

spaghettiWhile this skill may not seem like a financial one, people can save an incredible amount of money when they stop eating out regularly. Those who know how to cook well tend to eat much more cheaply than those who constantly buy take-out. Learning how to cook does not mean becoming the next Bobby Flay. Instead, by mastering a handful of meals that they can cook regularly, individuals can literally save thousands of dollars each year on restaurants. To make dollars stretch even further, they can purchase their ingredients in bulk, look for sales, or embrace couponing. Also, by making larger batches, one meal can turn into the next day’s lunch and even another dinner.

Choosing the best roommates

When looking for roommates, the top characteristic that people need to look for is financial stability, meaning that they will pay rent on time each month. However, they should also find considerate roommates. Sharing living expenses can significantly help a budget, but that help is for naught if the roommate constantly eats everyone’s food or is late paying their share of the utilities each month. During and immediately after college, young adults tend to want to live with their best friends, but such a situation can quickly become disastrous—and it may cost some important relationships. When people learn how to choose the best roommates early in life, they can avoid some real disasters further down the line.

Realizing that every dollar counts

Young people need to learn early on that every dollar counts when creating a budget. Spending $2 on coffee each morning before class may not seem like a big deal, but over time that money adds up. For example, that coffee becomes $10 a week, then $40 a month, and then nearly $500 a year. By making coffee at home in the morning, they can instead keep most of that money in their pocket.