Generally, we classify a young working adult as someone who begins his or her first permanent job after school. This is a time when parents grant one the independence to make financial decisions, and the young working adult embarks on his or her career, ready to conquer the world and get ahead in life.
This is also a considerably important phase in life, often neglected by many, as temptations to spend beyond your means are abound. If you have just started working, knowing how to plan and manage your finances early can help you achieve the goals and lifestyle you want later in your life.
Why do you need to plan your finances?
You may have never considered planning for your finances or your future at this point in time. This is extremely common because there is a sudden large deposit of cash in your bank account at the end of every month (aka your salary!).
Coupled with your desire on securing your first car in a couple of years, the goal of purchasing the luxury goods and eating at restaurants you have always wanted, a frivolous attitude towards managing your finances may lead to many undesirable outcomes in your financial life.
However, I’m sure you have heard the old adage “to fail to plan is to plan to fail”.
Do not fall into the trap of thinking that everything will turn out fine even if you neglect to plan adequately.
When should I start planning?
So you may ask, when should I start?
The best time for a young working adult like you would be at a time when you have relatively little obligations to fulfill, which is probably right now!
Organizing your finances and designing a plan that shows you what needs to be done to attain your financial objectives would greatly enhance your prospects of financial success.
How can I start?
Sure, starting out is very exciting with your new found income. Unfortunately, it may become dangerous if you fail to keep this under control.
I’ve heard many young adults proclaim that you only live once, that life is short and if you don’t enjoy now, when then can you enjoy? (As the acronym goes #YOLO – You Only Live Once!)
I believe that they confuse the advice to budget their expenses and save for their future as “all work and no play”. There is nothing wrong in pampering yourself once in a while, but overindulgence is a sure fire way to long term damage.
Having a budget simply prevents you from wasting precious resources on things that you don’t need now, so that you can invest them on what really matters to you.
It is true that we only live life once. However, life does not end tomorrow, thus it is necessary to make prudent financial decisions to live it well.
And in my humble opinion: if you live it well, you only need to live it once.
Here are some tips and strategies that you can implement right away and already be one step ahead most of your peers.
- Set aside an emergency fund
- Prioritize your goals and aspirations
- Track your expenses
- Pay yourself first.
- Protect your goals and aspirations
- Investment Planning
- Monitor and Review your plan
Start your financial plans early to get a head start of your peers. Start it now!