Welcome to Adulthood

[Guest Post] Welcome to Adulthood

Gen Y Finance Guy General Information 5 Comments

It’s summer time and I’m making an active effort to unplug more than I have in the past. So, you will notice a few more guests posts than normal. I appreciate all of the other bloggers, freelance writers, and readers that have raised their hand to help keep the blog alive and well over summer. I hope you’re also taking some time this summer to unplug and enjoy a bit.

Just Graduated? Here is the Financial Information Needed to Take the Next Step

By Laur Davidson, newly graduated freelance writer

Ah, so you are about to enter the real world. Well, congratulations. It is time for you to enjoy the first few days before the reality sets in and you find yourself questioning everything you once knew. Okay, maybe it isn’t that bad, but you are in for an awakening of some sorts.

As you get ready to navigate the world around you, know that there are things you can do to prepare yourself financially for a sound future. It is important that you take the time to heed advice provided to you and work hard to set yourself up properly, so that you do not struggle to afford the things you need in life.

Below, we will go over some personal finance tips to help you as you enter the world of adulthood and become self-sufficient.

Learn to Budget

This cannot be stressed enough – you MUST learn how to budget, especially if you have a student loan payments, rent or a mortgage payment, utilities, or even auto loans on your back. As you start to budget, make sure that you determine how much money you make each month and keep it realistic. For example, if you typically make $2,500 per month, but one or two months you made $3,000, but this is not common, then you would want to make sure you set your monthly income amount at $2,500.

Once you have determined how much money you make, you can then start to budget for your necessities such as rent, power, and water. You can then move on to your student loan payment, food, and any other necessities.

If you have too many expenses, then you may need to make some adjustments to your budget. For example, you could look into different plans to pay off your student loans that provide some leeway on your monthly payment obligations. This can be done for many other forms of debt such as transferring credit card debt onto a low APR card to save on interest. Another example would be refinancing your mortgage at a lower rate, reducing your monthly payment.

If you are left with money after those bills are paid, you can divide the money up the way you need to. Budgeting takes work, but once you have one in place, you will be able to live without the worry of whether you will have money for your bills each month.

Establish Credit

If you do not have any credit, it is important that you work to establish some because you will need it. Whether you decide you want to purchase a home or car in the future, your credit score will come into play. If you have a poor credit score currently, you should work to raise it as much as you can. You can do this through secured credit cards and paying off some of your old debt.

If you are new to the credit world, a good idea would be for you to get a credit card. Most lenders will provide you with one even if you have never had one before. Once you have the credit card in hand, you do not want to go crazy with it and should only make purchases you can afford. You will then need to make payments or pay off the balance to raise your score.

Don’t Be Late on Payments

One of the many things that new grads and people new to entering the real world do not understand is that they cannot simply be late on their bill payments. While it may not seem like a big deal to be a day or two late, it can cause your credit score to fall quite a bit.

Your credit worthiness, and thus credit score, is partially determined by your ability and attempts to make payments on time. If you fail to make timely payments, you will find out quickly that you are in trouble credit wise.

Setup a 401k or Retirement Account

This is probably the most overlooked thing that everyone does, grad or not. It is important for you to establish a retirement fund or 401k. To help maximize your contributions, you should see if your employer offers a plan and will contribute on your behalf. Often, employers will match how much money you contribute up to a certain percent. When this happens, you are basically depositing double the amount that you initially selected, which helps your balance grow and you to feel more confident in your investment choice.

If your employer does not offer a program like this, you still need to create a retirement fund and contribute to it. This is your future livelihood and the sooner you save, the better your chances are for an early retirement.

Final Thoughts

Take your time. Budget. Learn as much as you can. As you enter the real world, you will learn a lot, so take some time to take it all in. The above tips will help you prepare financially for your entrance into adulthood and set you up to be in a good financial spot later down the road.

Personal Capital allows you to aggregate your entire financial life into one account. All you need to do to see all your accounts in one place is log in to Personal Capital and voila! But it doesn’t stop there. They even automatically classify all your income and expenses for you. You get a FREE and fully AUTOMATED tracking system!

Gen Y Finance Guy

Hey, I’m Dom - the man behind the cartoon. You’ll notice that I sign off as "Gen Y Finance Guy" on all my posts, due to the fact that I write this blog anonymously (at least for now). I like to think of myself as the Chief Freedom Officer here of my little corner of the internet. In the real world, I’m a 30-something C-Suite executive. I am trying to humanize finance by sharing my own journey to Financial Freedom. I believe in total honesty and transparency. That is why before I ever started blogging, I decided that I would share all of my own financial stats. I do this not to brag, but instead to inspire motivate, and also to hold myself accountable. My goal is to be a beacon of hope, motivation, and inspiration, for you, the reader, by living life by example and sharing it all here on the blog. My sincere hope is that you will be able to learn from me - both from my successes and my failures! Read More

Comments 5

  1. Being an adult totally suuuuucks. I miss my carefree days of youth. Ahhh. I’d also add to learn how taxes work. I had no idea (and still don’t really have an idea) and it was hard for me to do simple things like filing.

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  2. Setting up credit is a great point. I don’t believe when I as becoming an adult (still trying , actually) no one spoke to me about credit. It was just something that got established when I started to pay bills and open credit cards. I’ve learned a lot about credit since then, but it certainly something that can be easily overlooked when getting on your way.

    Nice post.

  3. Ahh the innocent days of just finishing school, life was so exciting back then in the 20’s! Starting to invest ASAP in your 20’s is something I wish I did back then (investing the right way, instead of plunking my money down with whoever wanted to help me ‘invest’ me money and make me pay high MER’s without my knowledge).

    Agree about the setting up credit part- parents sometimes think they are helping their children when they open up joint credit card accounts but they don’t realize that it should be under their own name to build credit.

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