Personal finance is not something that is always taught when growing up and is not a subject required to take or often provided in high schools or college.  One of few ways a young adult may learn about personal finances is if they were shown financial responsibility by their parents. Even in this case, many parents themselves are not financially responsible and do not have much advice to pass on to their children in order to prepare them as best as possible for their financial future.


If you find yourself ready to go out on your own and do not quite know where to start, the information that could make the difference between achieving financial success and constantly scrounging for money to pay bills is not as difficult to find as one may think.  Understanding personal finance is the first step to an ideal financial future, all that is required is a little bit of reading and some discipline to keep you on track.


  1. Learn self control with your money – There are many things such as credit cards or taking out a loan that make it possible for you to buy what you want when you want it. Do not buy what you cannot afford. It is best to wait until you save the cash for whatever it is you want to buy or you may end up paying interest charges from the credit companies or bank.  There may be always money available when you want it but it is wise to learn self-control, after all, money does not grow on trees; it takes the time to work in order to get a paycheck. Think about how many hours you have to work to afford whatever you will be buying.


  1. Have a realistic budget – Knowing where your money is going is another responsible way to keep track of your finances and there is no better way to do so than actually sitting down and figuring out a realistic budget for yourself. Compare your income to your expenses and make sure your income surpasses your expenses or you will never get ahead.


  1. Make sure to have an emergency fund – As it seems to go in life, anything can happen at any given time. Your car might break, you might need to buy a new fridge or an unexpected bill might arise. Before you decide to start a savings account it is better to opt for an emergency fund. Money set aside just incase anything happens unexpectedly and you need quick access to cash. Find any amount within your income to put aside for an emergency fund.  It will give you a piece of mind knowing that you have something to fall back on.


  1. Start a retirement fund as early as possible – It may seem like it is too early to start thinking about retirement but the truth is the earlier you start, the better off you will be in the future. Someone who puts less money towards a retirement fund at an earlier age will have a larger amount for retirement than someone who puts a larger sum of money aside at a later age. Also, the earlier you choose the right retirement plan for you and start adding money to it, the earlier you can start to earn interest.


  1. Protect yourself – It may seem unlikely that unfortunate events may occur but in reality, anything can happen.  It is important to be ahead of the game and protect yourself in any event. If you are a renter it may be wise to look into getting renters insurance to protect your assets in the case of a fire or burglary.  Another beneficial thing to have is disability insurance just incase you become unable to earn an income for any amount of time due to injury or illness.  The idea is to protect what you have and have a backup plan just incase.


  1. Save for important life events – Life will happen sooner or later and you will want to be prepared when it does. Buying a new car, getting married, starting a family and your child’s education are all things that will cost you money in the future, which you may not be able to afford on your budget at the time it happens. Saving some money, preferably in separate accounts designated for each major life event will assist you with your future goals.


  1. Have a savings account – It is said that one should save one third of every paycheck and designate it to your savings. It may seem like a large chunk of your hard earned pay but it is an essential step to financial security. At some times in your life you will find that it is near impossible to do so – and this is fine, however, do not give up this habit completely. Avoid spending on unnecessary tangible items that will need to be upgraded as technology changes; these are all unnecessary expenses, which will seem worthless when you look back at what you spent your money on.


  1. Pay off student loans as early as possible – Taking out a student loan in order to pursue your education is not a bad idea, however, ignoring to pay it back in a timely manner may cost you much more interest than anticipated. Paying off a chunk of your student loan will save you more than if you continue to make the minimum monthly payments. Of course we do not all have the funds to make such large payments and it may take years after graduation before building up enough money to do so. Once you have a healthy bank account, do not hold yourself back for too long. Get it paid, done and over with and it will be one less expense to worry about and you will know that you are no longer being charged extra interest.