This post is all about financial tips for young adults.
Are you tired of always having to worry about if you´ll have enough money by the end of the month? Struggling to keep your money in your bank account?
We go to school for about 18 years of our life, a school where we learn about mathematics, physics, history, art, and so many other subjects.
However, after those 18 years, we are thrown into the world barely knowing anything about how to navigate it.
And one of the areas we are least prepared for is our finances.
After we finish school we are encouraged to look for a job and exchange our time for money, the universal exchange system our world is ruled by.
However, what is money? How can I take care of my finances? And the most important question: how can I manage my money so I don’t have to live paycheck to paycheck anymore?
Today in this blog post you´ll discover these 7 incredibly powerful financial tips for young adults and learn how to manage, take care of your finances, and most importantly how you can stop living paycheck to paycheck.
Before we start I want to share with you something that you might be aware of, but I bet you never actually gave it a thought.
Since we were little we were told by our society that in order to earn money you need to have a job.
But not just any job, we are constantly pressured to find a good job, one that will pay us a lot of money, so that one day we can even be rich.
However, did you know that you can earn money without having to have a 9 to 5 job, or even better, that if you are smart enough and put in the work, you might never have to work a day in your life in a job that makes you miserable?
I know you might have probably heard of this before, people who don’t have a conventional job and spend their days doing the things they love and somehow manage to earn even more than us.
And they are able to do this because they worked for their financial freedom.
You might be wondering why am I telling you this, well because, with these tips, I don’t just want to help you take care of your finances, I want to help you achieve your financial freedom so that one day you can too spend your days doing the things that you love, instead of wasting your life in a job just to earn money that flies away quicker than you can catch it.
So without further introduction, let´s begin with these 7 powerful financial tips for young adults!
Have a budget and get used to managing your money
One of the biggest mistakes that people make is viewing money as a tool for survival. They use their money to pay their bills, expenses, debts… By the end of the month, there is barely any money left to invest or save.
However, in order to achieve your financial freedom, you have to make a mindset shift.
Meaning that you need to see money as a vehicle to make your dreams come true.
Don’t see money with a limit, but as an unlimited thing that you can invest to produce even more of.
That is why learning about personal finances and how to make money work for you is so important.
And the first step to stop living from paycheck to paycheck is to learn how to manage your money.
But what does this mean exactly?
Managing your money means having control over where your money is coming from, where and how much you are spending, and finally how much there is left at the end of the month.
Adopting the habit of managing your money is important not only because it gives you a sense of control and comfortability over your finances, but also because it will give you a starting point over what areas you need to work on.
Taking control of our finances may seem weird and difficult at first, so I want you to think of yourself as if you were a business.
In a business, it´s very important to have a record of how much money they are earning, benefits, costs, etc. so that the company doesn´t bankrupt, right?
Well, the same thing applies to you.
Another thing you can try in order to start managing your money is to budget.
A good framework to start could be 50/30/20 where 50% of your income goes to your needs (rent, bills, expenses…), 30% to wants, and the remaining 20% to investment/savings.
So following this framework, at the start of each month, you divide your income into these three categories and start making a record of where you are spending your money.
Invest your money
You will work until you die unless you find a way of making money work for YOU.
This is an essential idea you need to understand in order to achieve your financial freedom.
But what does it mean to make money work for you?
As we said before since we were kids we have been repeated the importance of having a job so that we can earn money.
In this system, we are exchanging our time for money, by working for it.
However, what we want to achieve is the opposite: to make money work for US.
How is this possible?
Let´s start with the definition of financial independence: Financial freedom is being in such a position where you have enough income to pay one’s living expenses without having to be employed or depend on anyone.
So following this definition, our money works for us when it is not linked to the time we invest in earning it.
An example of this is when we earn money while we sleep. In this case, we are not working or investing our time in a job, but we are still receiving an income.
When we have a job the amount of money we can earn is directly linked and limited to the time we dedicate to that job, the more we work, the more we earn.
But the truth is that we do not have an infinite amount of time and everyone has a limit to how much time they can devote to work.
Okay, so in order to achieve my financial freedom I need to make money work for me, but how the hell do I do that?
Well, there are 4 simple ways in which you can make money work for you:
- Education: This option is barely considered because it doesn´t directly give you an income stream. But if you think about it, everything starts with education. How can we expect to be successful at anything if we don´t take the time to educate ourselves?
- Intellectual Passives: Have you ever thought about turning your experience and skill in a specific area that you master into something profitable? We live in an area of information where people can find the answer to any question with just a phone and some internet. And the best thing is that many people today are willing to pay for those answers and that information.
- Investing: Investing is considered as the action to put forth capital to earn a profit or an income. Inside this method of creating passive income streams, there are 4 big families in which investments are divided: Raw materials, Real estate, the Stock market, and Mutual funds.
- Modern Passives: Modern Passives consist of all the new ways in which you can create passive income streams thanks to the technological era. They are characterized by the small amount of capital required to create these incomes. ( For example affiliate marketing, having a YouTube channel or blog, dropshipping, etc.)
You can learn more about these 4 ways of making money work for you and so living from paycheck to paycheck in this article!
It’s all about the mindset
Being a person who is financially free is a consequence of WHO you are, not of what you have.
That is why it is so important to make sure that we have a successful, abundant, and wealthy mindset.
The first fundamental difference between millionaires and poor people is their way of ACTING, FEELING, and THINKING.
We often think that what determines if a person is wealthy or not is their past, their circumstances, the people they are surrounded by, the opportunities they were given…But that’s not the truth.
The second main difference is that millionaires are entrepreneurs, not employees. The difference between these two words is not the position they represent, but the mentality each person has.
In fact, you can be a millionaire and still be an employee, because, then again, it’s all about the mindset you have.
That’s the reason why you need to discover what kind of beliefs and mindset you have towards money and change it so that your mindset motivates you to achieve your goals, instead of slowing you down.
Prioritize your health
The fourth financial tip for young adults is to prioritize your health.
And I know what you might be thinking, what does your health have to do with your finances?
Well, the point of having money is to be able to enjoy it (even though we sometimes tend to forget that).
However, how can you enjoy your money and the things you love when you are not taking care of your physical and mental health?
Want to discover these 7 life-changing habits to improve your mental health and be happier?!
Live below your means
Linked to the habit we say in the previous financial tip about managing your money and budgeting.
This idea may seem like a no-brainer but you’d be surprised at the number of people who spend more than they earn.
And the biggest consequence of this habit is that by spending more than you have you are changing yourself to living from paycheck to paycheck and never having enough at the end of the month.
This will make you depend on your salary and job, which is the biggest mistake you can make when trying to achieve your financial freedom.
So if you think you are spending more than you are earning take a look at your finances, at the kind of things you are spending your money and which ones of those you can cut back on.
As Warren Buffet said, “don’t save what’s left after spending, but spend what’s left after saving”.
Invest in your financial intelligence
The second most important thing to focus on to achieve your financial freedom is to develop your financial intelligence.
But why should you focus on developing your financial IQ?
Because financial intelligence simply consists of having more options. Investing in it gives you the opportunity to live a better life, to live a life on your terms, to not be forced to accept conditions that you know will make you unhappy because you have “no other choice”, it gives you the ability to take what you have and turn it into something better.
Financial intelligence is not so much about what happens, but about how many solutions you can come up with to become rich. The mind is the most powerful asset we have. If we train it well, it can produce enormous wealth in what seems like an instant.
Read books, listen to podcasts, go to seminars, and invest in your financial intelligence. Reconnect with your curiosity and your desire to learn new things and start learning from the ones that did it before you.
Stay away from get-rich-quick schemes
And the last financial tip for young adults is to stay away from get-rich-quick schemes.
Because here is the truth: you cannot get rich overnight. And if that is what you are looking for is to get rich quickly, then I suggest you abandon the idea all together because you’ll be disappointed.
One of the many skills that achieving your financial freedom requires is to be patient and never quit before you might not succeed at first and you will certainly not achieve that overnight.
So do yourself a favor and stay away from rich quick schemes that are only after your money.
Unfortunately, even though we learn about a variety of topics at school, after 18 years we are thrown into the world without barely knowing how to survive it.
And one of those topics is money.
But today you learned 7 powerful financial tips for young adults to not help you manage your finances but to help you achieve your financial freedom as well.
These tips were:
- Make a budget and learn how to manage your money
- Stay away from get-rich-quick schemes
- Remember that it’s all about the mindset
- Learn from the ones who did it before you
- Live below your means
- Make money work for you
- Prioritize your health
I hope you found these financial tips for young adults helpful!
If you made it to the end of the article, thank you so much for investing your time in it. I hope the tips, tools, and exercises in it will help you increase your productivity, help you manage your business, and be able to dedicate your time to what truly matters to you and your mission.
Now, before we say goodbye I have one more question for you: What are your 3 biggest takeaways from the article? I´d love to read you in the comments!