Once you’ve graduated college and started your career, it might be tempting to spend money irresponsibly as you begin decorating a house or celebrating your success with fancy gadgets or vacations. Unfortunately, foolish spending can lead to a lifelong problem if you aren’t careful, so it’s best not to start. The following tips can help you learn responsible personal finance.
One of the easiest steps you can take in your journey to being fiscally responsible is to send money to your savings account automatically. When you’re setting up direct deposit information at a job, allot a certain dollar amount or percentage of your paycheck to transfer to your savings account. For the best results, don’t touch your savings account except in the case of an emergency.
If you’d like to save up for a vacation or other non-essential item, try doing so by putting all of your change into a jar. If you don’t use cash, some bank cards allow you to automatically transfer money to your savings account by rounding every purchase you make up to the next dollar and sending the extra change to savings. You might consider setting up a separate account for “fun” savings.
Use Credit Responsibly
Misusing credit is probably the easiest way to mess up your finances. Don’t use a credit card unless you are sure you can pay off the purchase by its due date the next month. Always aim to pay the entire balance rather than the minimum to avoid paying too much interest.
For truly good credit, be sure to pay all bills on time, including rent, utilities, medical bills, and school loans. Past due payments reflect on your credit report, especially if you do it regularly. In addition, take advantage of your free credit reports to ensure there are no discrepancies. If you stagger your free reports from the three major credit reporting agencies, you can check your report free of charge every four months.
Don’t Forget About Insurance
You never know when a health emergency, car accident, or natural disaster is going to happen. If you don’t have insurance to cover an unexpected situation, you could end up draining your savings or running up credit balances. A professional will be able to help you determine what insurance you need, but typically you should have health insurance, renters or homeowners insurance, and auto insurance. Unless you have dependents, life insurance won’t be necessary yet. When searching for a Washington DC insurance agent — or one in your area — comparison shop to ensure you get the best deal for your needs.
Learn to Take Care of Yourself
Not cooking and cleaning for yourself can add up to big bucks spent. Consider how often you hire someone to clean your apartment, how much money you spend at bars or in restaurants, and how many nights per week you order takeout. Spending $20 might not seem like much at first, but when you’re spending $20 several times per week, it adds up.
Being an adult and using responsible personal finance practices doesn’t need to be scary. These tips and tricks can help you on the path to lifelong financial security.