You have your first real job, your first apartment, and it’s official: you are an actual responsible adult now!
Do a Favor for Your Future Self
Maybe you’re making more money than you ever thought you’d make at this point, or maybe you’re struggling to keep yourself in ramen noodles. Either way, it may be time for a little talk about financial literacy.
April just happens to be Financial Literacy Month, so if you don’t already have a handle on your personal finances, this is the time to get started.
First of all, think about your financial goals, both short-term and long-term. Perhaps you’d like to buy a house, have children, travel, invest, contribute to charity, get another degree, or start a business. Or maybe you want to build a giant tree house or buy a farm for wayward puppies—no judgment here. Regardless of what your goals are, you need to plan ahead to make them happen. Have you taken steps to make your goals a reality, or do you assume these things will magically happen someday?
How much money do you spend on entertainment or various other things known in the adult world as non-essentials? If you have budgeted for all your fun times and you can afford them while also saving money for your long-term goals, that’s great.
If, however, you find yourself at the end of the month with nothing left (or worse, not enough to pay your bills), you may be regretting your daily venti iced hazelnut mocha caramel macchiato habit or that day you couldn’t stop bidding on electronics on eBay.
Many’s the person who, in mid-life, struggling with a mortgage and all the costs of raising a family, wishes he or she had saved more money back when personal responsibilities and expenses were lower. You’ll probably never look back and think to yourself, “I wish I had not saved so much money when I was young.”
The best time to make a budget is when you get your first job. The second best time to make one is right now. It’s not so hard. Just add up all your income and all your expenses and see if your money is going where you want it to go. If you can’t figure out where all your money is slipping away to, track every dollar you spend for a month. Are you devoting much more to daily lunches than you thought? Consider brown bagging at least part of the time. Are you blowing a lot of money for cable that you aren’t even watching? Maybe you want to scale that down. Do you have a tendency to go nuts on clothes and shoes? Go a little less nuts. How much money are you spending at the grocery store? Sorry, but you may need to learn to cook.
While you’re having your grown-up budgeting moments, you also need to make sure you’ve protected yourself financially. Do you have renters insurance? If your apartment catches fire, your landlord’s insurance will not cover the cost of replacing all those personal belongings you probably spent way too much money on. You don’t want to start over. Fortunately, this protection is surprisingly affordable.
Check your car insurance as well. What’s your deductible, and do you need to raise it or lower it? You can save money by setting a high deductible, but make sure you don’t set it so high that you can’t pay your share of repairs in case of an accident. Talk to your insurance agent about your options.
Budgeting and going over insurance needs may not be as much fun as a night out with friends, but it’s something responsible adults need to do, and it can make a real difference in your long-term finances. Your future self will thank you someday.