6 Financial Tips for Young Adults

Managing your finances may seem simple for some, but for other people, it is a constant task of juggling bills and staying on top of expenses. For young adults, this could be a case of stepping into the unknown especially when applying for a loan for the first time or experiencing difficulties with a low credit rating. To help, here are 6 financial tips that may provide some much-needed guidance.

  1. Keep An Eye on Your Spending

It can be very easy to spend your hard-earned income soon after you’ve been paid. After all, it is nice to spend money on the things we love to do and buy. However, this can quickly get out of control if you are not staying aware of your spending. If you do not check your bank account regularly apart from to see if you’ve been paid, you could run the risk of spending more than you have. By simply checking your account regularly you can stay on top, including pending transactions for debits that have not left your account yet. Mobile banking makes this very easy to do on the go so you have no excuse not to check.

  1. Choose Lenders Wisely

When borrowing money, you want to choose the right lender for your circumstances rather than opt for the first option available. If you haven’t borrowed credit before, or have a low credit rating, you may find doing so difficult as many lenders will want to avoid the risk of lending to those with no credit history. There are lenders of bad credit loans that can help when you need it in this situation, helping cover an emergency expense when you have no other options. This type of lender won’t decline you just for a low credit score and instead will assess your affordability. Choosing lenders wisely from trusted sources will ensure you don’t borrow more than you need and that you can afford it.

  1. Review Income & Expenditure

If like many, you wonder where all your money goes before payday, it could be time to review your outgoings. You can simply compare your income with your essential monthly outgoings, and this should leave you with a disposable income. If at this stage it shows very little or a minus figure, this would need to be addressed quickly. From your disposable income, you can work out where your non-essential spending is going. You might even be surprised at how significant your disposable income is, highlighting too much non-essential spending. Here, you’ll then be able to check your statements and cut back where necessary.

  1. Maintain Essential Outgoings

Your essential outgoings must be maintained, otherwise, this could lead to arrears building up and possible financial difficulties. Your income should cover the essentials at the very least, so if they are not, it could indicate your spending habits are too high. If when you review your income and expenditure you discover your income is not enough to cover essential payments such as rent, a mortgage, utility bills etc., you’ll need to speak to your creditors for advice. Missing repayments on essential bills can lead to bigger difficulties, so getting in a good habit of always having enough to cover these is best. Ideally, have these payments come out as close to your salary date as possible.

  1. Check Your Credit File

Another good habit to maintain is that of checking your credit file. If you have never done so before, it will help provide context behind why your credit score may be low as well as the positives. Many people will check their credit report before they apply for borrowing. This is to check if anything iscausing an issue and can be resolved. Something as small as an incorrect address history can cause problems, as well as missing information. Check your credit file with one of the credit reference agencies available, such as Experian, Equifax or TransUnion, and question anything you are unsure of.

  1. Don’t Forget About Savings

Whilst maintaining your finances and keeping all your payments covered is important, it is also crucial to save regularly. Ideally, you should have a savings account setup as well as an emergency savings fund. The idea is one that you keep your main savings in to use for future purchases, such as a house deposit, and the other for emergency use only. So, for example, if you suffered a loss of income or an unexpected bill, you have an emergency fund to rely on. You can start small and build this up over time and avoid becoming overly reliant on credit.

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