Financial Responsibilities as Young Adults (2018 Update)
KEYWORD PHRASES: Personal finance young adults
As young adults, it is indeed a liberating experience to earn your first pay cheque and feel financially independent. It is a time when you feel like you have left your student life behind and arrived in the real world.
Most youngsters revel in this new found freedom, and either end up getting swayed by it or act smart and start focusing on saving and investing. We agree, the urge to splurge your first pay cheque can be quite strong. And it is probably okay to give in to some extent. But when this goes overboard, you could find yourself up to your ears in debt. The situation worsens when you end up snowballing your debt by taking other loans to pay up your existing credit card bills and other liabilities.
The only way to avoid this adversity is by managing your finances prudently. We do not want to sound preachy, but certain lessons tend to be true at all times. Handling your finances responsibly may not seem like your cup of tea, but if you keep these few things in mind, you could just make your money work harder for you. When it comes to personal finance for young adults, here are few things you ought to know.
Controlling your expenditure and credit usage
It is natural to want to wear the best labels to work or to buy that expensive car you have been eyeing for months but if it takes up an entire chunk of your salary, then maybe you should rethink your purchase. These expenses are not investments by far, and will eventually drain your account. Hence, it is important that you restrain your expenses to some extent so as to avoid being bankrupt in the early stages of your career. When you make an expensive purchase, you might think that this is just going to be a one time thing. But it doesn’t take long for people to turn into complete spendthrifts with outstanding credit card bills. It is, therefore, advisable that you limit your credit usage and control your expenditure in the initial few months of your career. This is the time when you will be laying the foundation for future financial growth with the help of strategic financial planning.
A good way to ensure you have a firm grip over your expenses is by budgeting. It will help you manage your disposable income and manage your expenses systematically. To begin with, you can list all your daily expenses that includes transport, rent, food, bills, and others. The next step is to decide what portion of your salary you want to allocate for each of these expenses. Once you have decided on the amount you can spend, set aside the rest of your pay and save it. And remember to have realistic targets or you’ll just end up being disappointed with the whole budgeting process.
While you budget, make sure you review it every now and then to revise your saving and spending goals. If required, even use an online budget calculator to budget all your expenses accurately.
With proper budgeting, you will be left with some amount to save. When you start saving initially, it might seem like you are saving very little but over a period of time, your earning capacity will increase and so will your return on investments. This means you will be able to save a lot more as time progresses.
Ideally, you should aim to annually save at least 3 – 6 months of your salary as an emergency fund. This will help you survive in case you get laid off your job, meet with an accident or are temporarily unable to work due to some reason. You might also have to set aside money for that long pending vacation you intend to take, for unforeseen health related expenses, your upcoming wedding or even for getting your parents an expensive anniversary present.
Building a financial portfolio
Once you start saving, you are in a position to take baby steps towards investing your funds. Most people begin with getting a fixed deposit. Other investment options include mutual funds, stocks, bonds, real estate and cryptocurrencies. These days more and more investors are investing in cryptocurrencies. Bitcoins are the most popular option when it comes to investing in cryptocurrencies. While you spend time strategizing on the best mix of investment options for your financial portfolio, don’t forget to pay attention to your retirement planning. The most common element in most Singaporeans’ financial profile is the Central Provident Fund. It is a good retirement planning option for those who want high returns but are not willing to take any risk.
Payment of taxes
Paying taxes is your first duty towards the state. If it’s your first time, then you might be wondering as to how to file your taxes and perform the required procedures. Generally, you will receive a notification from the Inland Revenue Authority of Singapore (IRAS), asking you to do the needful with respect to the payment of taxes. Planning for taxes is of paramount importance while managing personal finance for young adults.
As young adults, you are in the best phase of your life when it comes to savings. You don’t have the responsibility of a spouse or children. By being financially responsible today, you will slowly and steadily create a sizeable corpus for your and your family’s future. Best of luck!
Quick Credit Pte Ltd
Quick Credit Pte Ltd is the best money lender you will be able to find in Singapore. Anything cash related, we will be able to help you. Our well train loan consultants will be able to come up with a good loan package to help you clear off all your outstanding bills or debts. In doing so, you will help you keep better track of all your expenses and money. We have been a licensed money lender since 2002.
We have the skills, knowledge and people to assist you through the entire loan process while providing you with excellent advice.
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