A Guide to Money Management for Young Adults

money management for young people
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Managing your money as a young adult can be difficult – especially if you are a student and unable to start full-time work. And this year is set to be more daunting than others with inflation hitting a 40-year high and energy bills rising precipitously.

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Lack of education about financial management, debt, financial anxiety, and the cost-of-living rising can all make the prospect and task of money management worse. However, there are many methods you can employ to help you cope with your finances as a young adult.

Analyse your incoming/outgoing money

The first step is to honestly assess your current financial situation. Begin by analysing your monthly income, such as your student loan payments or salary, and any additional payments you can expect such as financial support from your parents. You should then assess how much you spend each month on essentials – in other words, the money you have to spend. Rent, bills, groceries, education, and transport will make up the majority of this amount. You will then be able to see the balance amount – essentially, the spare cash you have to spend on leisure activities or put into savings. By working out whether you’ll accrue savings or lose money each month, and what your actual costs are, you have a clear foundation on which to prepare a money management plan.

Balance spending with a budget

Once you understand your incomings and outgoings, you’ll be in a good position to balance your spending with a budget. There are plenty of apps that can help you with budgeting, but the principle is simple. You should look to structure your spending in a way that allows you to grow your savings each month. By giving yourself a set amount to spend on luxuries, you can be disciplined with extra purchases and avoid any financial issues towards the end of the month. Budgeting also reveals where you might be spending too much money, allowing you to find opportunities for cutbacks.

Take advantage of discounts and deals

There are plenty of student discounts and deals available out there, and it would be foolish not to make the most of them. Websites such as UniDays and StudentBeans can help you access plenty of retail deals for a start, such as discounts on clothes or special offers from your favourite restaurants. You could also consider using special short-term loans for students to cover a significant expense towards the end of term which can be paid back when your next student loan payment comes in.

Don’t succumb to quick fixes

It’s easy to try and sort a quick fix to ease the pressure on you. Purchasing a credit card or extending your overdraft could both seem like appealing options, but reckless spending like this can land you in financial trouble. Ensure that you understand repayment realities and make considered decisions before choosing a financial strategy. Speaking openly with a friend or family member is always advisable. Remember, you are not alone in finding personal finances overwhelming at times!

Money management for young adults can be extremely difficult. But by following the guide above and exploring all your options, you should be all set to make informed decisions that suit you.

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