3 Money Lessons For First Time Jobbers (To Be Financially Responsible)
The concept of responsible money management can be utterly alien to young adults or fresh graduates. After all, the urge to splurge once you’ve received your first paycheck is tempting.
And yet, by learning how to save and be financially responsible early, you can protect yourself from some potentially devastating financial consequences.
What does it mean to be financially responsible?
Financially responsibility – two big words with more than two syllables in each word is enough to put some people off.
While you may not fully master this skill in your first try, your future (older self) will thank you for learning to save and keep track of your expenses as early as possible.
This might sound simple, but it is actually quite easy to lose track of your expenditure if you are not careful. You may consciously avoid spending large sums of money at a time, but many small purchases over time can lead to the same problem.
Here’s an ideal checklist of financially responsible behaviour.
- Understanding costs and income to better to budget and ensure all expenses are covered
- Saves up money to cover for unexpected costs that will eventually turn up sooner or later along with future necessities
- Has a healthy attitude and outlook towards money, possessing a long-term view and planning to live within their means
- Pay outstanding bills and installments on time
- Manages credit responsibly and constantly be on the lookout for ways to cut costs
- Shops around and does sufficient research when making any financial decision in order to ensure they are getting the best deal possible for their needs
- Pursues proactive financial education, both understanding basic financial concepts and financial products
- Has a written strategy or long-term financial plan, often created by working with a financial professional
If none of the above is your answer, it’s time to level up your money game before it’s too late.
3 money lessons to be financially responsible
Overall, it is best to start practicing financial responsibility as early as possible if you want a far less stressful life.
Those who do not have a proper long-term financial plan may end up “winging it” with their finances, and may end up struggling to cover their living expenses and basic needs. And when an emergency finally occurs, it may be impossible to get back on track financially again.
Here are 3 simple money moves to set you on the road to become financially responsible.
1. Future-proofing your finances
To be financially responsible, you need to live within your means. This means that you will have to spend less than you make while keeping tabs on said expenditure. Here are a few ways you can be financially sound:
Start saving – The easiest and most basic method is to simply start saving now. Whether if it is from income or allowance, setting aside a small percentage of your earnings can help when unexpected expenses start popping up.
Track spending – While it might be tedious to most, keeping tabs on where your money goes is a good way of understanding how much you really need. When reviewing this data, you might be surprised at how much the little things can eventually add up. However, it also helps you to determine what can be cut out, thus saving more in the long-run.
Educate yourself – Knowledge is power. Learning how credit, interest, and investments work will go a long way in helping you to strengthen your finances. By educating yourself, you will be able to make better decisions like managing their credit well, having a good credit score, and getting better interest rates, insurance rates, etc.
2. Understand debt and credit
Credit cards are incredibly convenient and can help you build your credit score. However, they can just as easily lead to debt if you are not careful. If you want to be financially responsible, it is not enough to just make your minimum monthly credit card payment. Responsible use of credit means paying the balance on your account in full each month. Keep this in mind when you plan to use your credit card as it can teach you how to spend within your means.
Additionally, credit cards should be used for convenience only, and never to make ends meet. While it is entirely possible that you may be forced to carry a balance on your card due to emergencies, being financially responsible means limiting your spending until that balance is paid off.
3. Learn how to budget
Budgeting is a core pillar of financial responsibility. Every successful business knows the importance of understanding their cash flows and balance sheets. The same principle can be applied to individuals. Know how much you have, appropriately divide your funds to cover all necessary expenses, and keep tabs on where your money goes. This way, you can ensure that all your financial responsibilities have been settled before spending on what you want.
Even then, it would be a good idea to set some cash aside in an emergency fund. Experts often recommend that everyone should have at least six months’ worth of just in case. If anything goes wrong, this emergency fund will at least guarantee that you can pay your bills until you can find a solution.
Ultimately, financial responsibility means living within your means, whatever the level those means might be. As such, take a close look at your financial situation, review and evaluate your earning and spending habits, and make the necessary adjustments to put yourself on responsible financial footing.