Young and Feeling Stuck Financially? Being young and free can feel good and liberating, but eventually, you may find yourself feeling stuck in a rut financially. Oftentimes young people will feel like they are just living week to week and it’s a cycle that they are never going to be able to break. But did you know that it’s never too late to start changing things around so that you can build your path to financial freedom? If you’re young and feeling stuck financially, here’s what to do.
Reduce and remove credit card debt
Having debt on credit cards shouldn’t be the norm. It seems like it is since 55% of Australians carry a balance on their credit cards, but as you start to grow older, this debt becomes more of an issue when your priorities change, such as getting married and starting a family. Having too much debt can prevent you from getting a home or a reliable car and other things that you may need. To get rid of your credit card debt, sit down and write out the companies that you owe and also how much you owe them. Now, look at how much money you bring it and how much you can pay towards those debts. The more you can pay the better so that you can get them paid off quicker. No extra money to do so? Check out the next step.
Make and use a budget
Make a budget and stick to it. One of the best things you can do is use technology to help you see where your money goes. Many budgeting apps and programs will show you in simple form what you’re spending your money on. You can look at this information and make decisions on where you could be spending less money. For example, if you notice that 30% of your income goes towards entertainment, you can find less expensive forms of entertainment or cut back on the category in some other way.
Pay yourself first
Pay yourself first. Yes, it sounds silly, especially if you barely have enough money to pay your bills, but if you don’t have savings, what’s going to happen if you need money for something quickly? You’re probably going to put it on a credit card which will prevent you from paying down the debt. Even if it’s only a few dollars every time you get paid, make sure to pay yourself first! Keep in the mindset of planning for the unexpected. The money may just be sitting in the savings account today, but you’ll appreciate it when the day comes that you do need it. And if you don’t need it, it’s more money in the bank that you can use to help buy your first home or start your family with.
“The best time to plant a tree was 20 years ago. The second best time is now.” Find the motivation to start now. No matter how old you are, you can use these tips, but the sooner you start, the sooner you can break the pay to pay cycle.
If you’re really not sure what you should do first, speaking to a qualified Paradise Financial Group planner can help you start heading down the right path.