Five lessons on how to manage personal finances from a young age

Five lessons on how to manage personal finances from a young age

Five lessons on how to manage personal finances from a young age
Below are tips on how to manage personal finances from a young age, helping you have a reasonable management and spending plan, thereby having a stable and comfortable financial fund in the future.
There is a sad reality that most young people in Vietnam today do not know how to manage their personal finances, leading to the situation of often being “out of pocket” and not knowing where their money goes. This is a common problem but also quite understandable because from a young age, money is a sensitive issue and is avoided being discussed in families. At school, there are no subjects related to personal financial management. Only young people who are truly interested in this issue will learn and build for themselves a suitable financial management plan. Below are tips on how to manage personal finances from a young age, helping you have a reasonable management and spending plan, thereby having a stable and comfortable financial fund in the future.

Manage personal finance

1. Really stick to your budget plan

Many young people actually have the idea of ​​a budget plan for spending, however, very few individuals actually follow that plan. From a young age, you should seriously plan your budget – allocate how much you earn, how much you’re allowed to spend, how much you need to save or invest, and really stick to it.
The whole point of budget planning is to know where your money goes so you can make sound financial decisions. Knowing your spending habits will help you spot unnecessary expenses and figure out how you can save more money in a retirement fund or money market account.

2. Stop spending your entire salary

When you’re young, you don’t have many responsibilities to worry about and can spend your entire salary or even more than you earn each month. However, this will bring bad consequences in your later years. According to Patrice C. Washington, author of “Real Money Answers for Every Woman” (Real Money Answers for Every Woman): “How you use $100 is how you use $100,000. You cannot change your attitudes, behaviors, and habits. The problem is not about money, but about whether you are disciplined in spending or not.”
Stop spending your entire salary every month. You can start by spending 90% of your income and saving the remaining 10%. To spend wisely and save money, apps from banks or savings apps can help you do this by automatically deducting money from your salary and putting it into your savings account every month. Gradually, you can increase the amount of money you save and reduce the amount of money you spend.

3. Awareness of financial goals

You should envision your financial goals from a young age and think about how to achieve them. You are less likely to achieve any goal if you don’t write it down and create a specific plan for it.
For example, if you want to travel to Italy, then stop dreaming about beautiful Italy and make a clear financial plan for this. You need to know how much money you need and calculate how much you will have to save each month. Or if you want to retire comfortably, build a specific accumulation plan and gradually realize that goal early on.
The same is true for larger financial goals like paying off debt or longer-term goals like buying a house, buying a car, etc. You need to be serious and have a plan if you want to reach your long-term and long-term goals. more sustainable such as building an education fund for children, retirement fund for old age…

4. Evaluate the debt situation

Many individuals become complacent about their debt after they turn 30. For those with student loans, mortgages, credit card debt or other forms of debt, paying off debt has already begun. becomes a different way of life, debt can even be considered normal. However, you should proactively evaluate the amount of debt you have beyond your mortgage and create a budget that will help you avoid taking on any more debt.
There are many methods to eliminate debt, but the “snowball” effect is common to keep individuals motivated, which is to write down all your debts from smallest to largest. most, regardless of interest rates. Then, make the minimum payments on all your debts except the smallest one. For the smallest debt, invest as much money as possible each month. The goal is to get these small debts paid off within a few months and then move on to the next debt.

5. Establish an emergency fund

An emergency fund is important for your finances. If you don’t have an emergency fund, you’re more likely to have to dip into your savings to pay for unexpected things.
Expert and billionaire John Paul DeJoria also agrees that creating an emergency fund as soon as possible. From a young age, you should build an emergency fund. This is the minimum amount your account should have. You can set aside money from your monthly salary to create an emergency fund, from small to large goals. Some financial advisors recommend having an emergency fund equal to three months of living expenses, others recommend six months. You can choose more or less time depending on each situation

Leave a Reply