It can be intimidating when you first become financially independent. But if you have an understanding of basic financial tips, you’ll be ahead of the curve. Read on for tips to secure your financial future and set yourself on a path to success.

Track Your Budget

This is one of the most important things to do. As soon as you land your first job, sit down and figure out your monthly income and expenses. If your expenses are near or greater than your income, it’s time to cut back. Consider every one of your expenses, and make sure to leave room for saving for your emergency fund and long-term goals, like buying a house or car.

Save an Emergency Fund

Many people are reluctant to start an emergency fund because there are always other expenses to be taken care of, such as rent, car payments and student loan payments. According to GoBankingRates, 72 percent of millennials have less than $1,000 in savings, which isn’t enough for many major expenses. However, building an emergency fund of at least 3 months (and ideally 6 months) can safeguard you against unexpected job loss and bills like car repairs and medical expenses. It is a good idea to keep your emergency or rainy day fund in a separate pile from other savings like funds for a house down payment.

Learn How to Use a Credit Card

Some people shy away from credit cards because of worries about incurring debt with high interest rates. But if you use it the right way and pay off the full balance each month, you will build your credit score, which can help you secure low interest car loans, business loans and mortgages in the future. In addition to paying off your balance, make sure to keep your utilization rate low, which means you don’t want to use more than 10-20% of your credit limit in a given month.

Avoid Debt

Put simply, debt is the primary reason 20-somethings find themselves in serious financial trouble. This can include student loans, credit card debt, or auto loans. Try not to live beyond your means, and pay cash whenever you can. Don’t chase the latest trends in clothing, electronics and consumer items, and you will already be ahead of many others.

Start Saving For Retirement

It may seem far away, but it’s important to start saving early. This will allow your money to compound, as the market grows at an average of 7% every year. Unfortunately, two-thirds of millennials have nothing saved for retirement. If you keep putting off saving for the future, you will lose out on compound returns, and it will be tougher to catch up later. Even if you can only afford to put $100 a month in a retirement fund, it’s much better than nothing at all.

Don’t Buy a New Car

With so many commercials advertising the latest new car features, it can be easy to feel like buying a new car is the way to go. However, unlike a house, a car is a depreciating asset that will always be worth less just a year after purchasing. Instead of buying and financing a new car, search for used car sales through auto dealers and private sellers. Have an idea of reliable makes and models that you may be interested in, and check out Kelley Blue Book before shopping so you have an idea of fair prices.

Shop Around for Health Insurance

Your health insurance options depend on whether you work for a company or are self-employed. Either way, make sure to shop around to get a full picture of what your options are. As a young adult, you may not need a “gold” or “platinum” level plan, which are more expensive than other plans as they are targeted towards those who see doctors frequently throughout the year. A “bronze” or “silver” plan may be enough for you and would keep your monthly premium costs low.

Negotiate when Appropriate

Sometimes the listed price for something isn’t the final price. If you are interested in purchasing something and can’t quite afford it, consider whether negotiating the price down might be an option. For example, while homes and cars have a list price, both can be negotiated down using various methods. And when it comes to your salary at work, you can often negotiate with your supervisor to achieve a higher salary. Over time, negotiating these items can add up to a lot of savings.

These tips are all achievable, so implementing them as soon as possible will give you financial peace of mind and set you on track to achieve all of your financial goals.

About Joshua Frisch

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