Young people that have recently graduated from college or university often lack the skills to manage their money. This is an age group that can have a tendency to get into debt very quickly. Frequently youth has never had a substantial amount of extra cash. If they suddenly acquire a full-time job at an entry level salary, and have no skills to manage their money, they may find themselves in debt. Before this happens, it is important to learn some money management skills.
Opening a savings account is the first most important thing to do. Have a chequeing account to attach your bills and debit card spending to. Any money that is not needed for monthly expenses can be transferred into a savings account. Making an effort to put even the smallest amount of money in this account can encourage saving. Many of us enjoy the satisfaction of seeing the balance in the savings account rise month after month.
It can be a challenge to find a job in today’s market. It is common for recent post-secondary school graduates to take an internship to get job experience. An internship pays little or no salary, but the experience is priceless. If you have managed to save some money in your savings account, you may be able live off this money until the completion of your internship. Once you are employed, try to put a portion of each paycheque into your savings account and leave it there. Calculate what percentage of your paycheque you can afford to save, and what must go towards paying your bills. Make an accurate list of all your monthly expenses including rent, household bills, car payments, food, and entertainment. Once you have made a monthly budget for yourself, try not to deviate from it.
It is important to get a credit card for safety and large purchases, but limit yourself to one credit card only. This will help you keep track of any credit card charges and pay it off immediately. Multiple credit cards can lead to confusion and debt. Late or missed payments can affect your credit rating. Only use the credit card to purchase items if you have the money in the bank to cover the amount of the purchase.
Try to limit any social spending to the weekend. Think about things you can do after work during the week that don’t cost money, like going for a walk or bike ride with friends, or having friends over to watch a favourite TV show. Give yourself a weekly entertainment allowance. You will quickly learn that you can only spend your money once, so if you go out during the week you won’t be able to go out on the weekend.
Young people can learn to manage their money successfully and avoid the need for debt solutions or credit counselling services. Learning to manage money properly is one of the most important life lessons. Taking the time to think about your money can help you avoid stress and live debt free.