Technically you are legally an adult once you hit eighteen years old, but when it comes to finances, what does it mean when you have grown up? If you are blowing every penny you have on unnecessary expenses, living beyond your means, and not saving a penny, then I would say that you have plenty of growing to do if you want to reach financial adulthood, if you will. If you are wondering what sets you apart from the adults and children when it comes to finances, there are plenty of ways that prove you have financially grown up.
Can Hold Down a Successful Budget
You may have proven just how ahead of the game you are if you have a budget, let alone are successfully sticking to it each month. Most Americans do not follow a budget, two-thirds in fact, studies have shown, so you are in good shape if you have one. Once you have created one, the trick is tweaking it along the way to reduce spending and maximize money leftover at the end of the month so that you are not spending more than you are making.
Have Cash Set Aside for Emergencies
You never know when an emergency may happen so it is good to have cash set aside in case you need it. If you have unexpected auto repair, need to have a handy man out to your home, or even worse, lose your job, it can be good to have a few months’ worth of expenses in an account to access easily. Some say you do not want to keep too much in there though, as it could be best used gaining interest invested elsewhere.
Making Regular Contributions for Retirement
Retirement may seem like too far down the road to worry about now, but in fact the longer you wait, the less you will have to live off in your golden years, so it is best to contribute as soon as you can, as much as you can. If you have a 401(k) account at work that you company matches, you should at least contribute that much, as otherwise you would just be leaving money on the table. In addition to that, a Roth IRA is a great way to contribute up to $5,500 a year and earn interest tax-free.
Keeping Debt Under Control
Limiting spending and maximizing savings is key in keeping debt under control as you do not want to have balances carrying over each month on credit cards, wasting money on paying interest. It is tough to curb spending, but it is time to be a grown up and look to the future, making sure you have enough later in life.
Prioritize to Ever Changing Goals
When you first come up with your family goals, is it achieving a certain dollar amount in savings? Reduce spending money on going out to eat? Well the key will be once you meet your initial goals to then move onto the next difficult goal, continuing to prioritize what is truly important; your financial future.