This blog is for educational purposes only, not an offer of credit or advertisement for current loan terms. It does not provide legal advice. Refer to our loan web pages or consult professional advisors for specific information.
Whether you're a young adult worried about the future or the parent of a child or young adult and want to help them create good financial habits, opening a savings account and adding money regularly can help. There are other things you can do to start building a nest egg and ensure a brighter future. You can use this guide to start making all the right moves and begin building a bright financial future.
Creating a Budget
Income and expenses go hand in hand, and you need to understand how important they are. The best way to control your income and expenses is to create a budget. You can follow these steps:
1. Determine your income for a set period, such as two weeks or a month.
2. List your essential expenses, including:
a. Housing
b. Utilities
c. Phone bill
d. Car payments
e. Insurance
f. Food
3. List additional expected expenses, such as:
a. Entertainment
b. Clothing
c. Eating out
d. Gasoline and other vehicle cost.
4. Determine the ratio of income to expenses. If your income doesn't cover all your expenses, you'll need to find places to cut expenses.
There are many budgeting tools and resources available. You can download a budgeting app or use a spreadsheet. There are budgeting methods, including the 50/30/20 rule or zero-based budgeting. The 50/30/20 rule divides your budget into three sections: needs, wants, and savings. Needs get 50 percent of your income, wants receive 30 percent, and savings earns 20 percent of your income.
Tracking Expenses
Where does your money go and where can you save money? When you track expenses, you can answer these questions. You can use a budgeting app or simply keep a list of expenses in a notebook. Once you've tracked your expenses, you can reduce your expenses in a number of ways. Some expenses to cut or eliminate include cutting back on unnecessary subscriptions, eating out less, and finding free or low-cost entertainment options.
Setting Savings Goals
Short-term and long-term savings goals can help you save successfully. Some of these goals include saving for a car, college, or a down payment on a house. It might seem impossible to save $40,000 for a down payment for a house, but if you set smaller goals, it becomes obtainable. You might have a goal, such as saving $2,000 in five months or $400 per month.
To be a successful saver, you need to have a savings account separate from your checking account. You want to keep the money you're saving away from the money that you're spending. It makes it more difficult to spend it because you have to remove it from your savings account.
Taking Advantage of Student Discounts
From software to clothing to entertainment, many companies offer special student discounts. You should be in the habit of asking at check out if the business offers a student discount. You can even check with local businesses and online retailers for student discounts.
Finding Ways to Earn Extra Money
To meet your saving goals, you might need a way to earn extra money. There are many ways to do this. You might work part-time or freelance. Selling unwanted items online is also a great way to pick up some extra money. Having a side hustle can help with your savings and also allow you a little extra spending money for some fun.
MIDFLORIDA Helps Young Adults Develop Lifelong Savings Skills
At MIDFLORIDA Credit Union, we enjoy working together to build a future and develop financial skills. We offer a variety of online resources for young adults to learn more about their financial options. Our team is ready to help you choose your first savings account and start saving. Stop by one of our local branches or contact us now.
