When it comes to becoming an adult and stepping out into the world of having to do things on your own, it can be a bit overwhelming. There is a lot of information coming your way about what you should and shouldn’t do. Should you take a break before going to school and travel a bit or should you go straight in and buckle down? Should you wait to have children until after you establish a career or should you get it done early?
It seems that everyone has their own opinion of what the best path is for you. And while there is no one right answer for your future as a whole, there is one right answer for your finances. Here are the 4 golden rules of money that everyone should know at 20 years old.
Always Keep Savings
It’s important to keep a savings account at all times. When you do this, you ensure that you have a little pocket of money to the side which will cover you in case of emergencies.
Emergencies can come in all shapes and sizes. From getting into a car accident to finding out you need last minute dental surgery. Having the peace of mind that you can cover your expenses in a situation like this will ensure that you can focus on solving the problem rather than stressing about the problem.
Create a Budget
Creating a budget is as simple as starting a spreadsheet and entering all of your monthly expenses into it. By setting ground rules for yourself about what you can and can’t do with your money, and where it’s going, you’ll find that you have way fewer issues.
By failing to create a budget, you won’t know when you’re starting to overspend or get yourself into trouble. A budget keeps you aware of how much you can allow yourself to pay towards a certain area of your life, while still covering your bills and necessities.
Set Up Auto Pay
When it comes to paying bills, there is nothing more stressful to know that you accidentally let one slide. Not only can you find yourself with a hefty overdraft fee, but you could get yourself into trouble on your credit report which won’t go away for years.
Rather than rolling the dice about whether you’ll remember to pay or not, why not set up automatic payments. This way you know that your bills will get paid without you having to lift a finger. This will save you a lot of stress and grief in the long run.
Just make sure to balance your account so that you can anticipate these charges coming out.