As a person that is slowly gaining independence and having to live for themselves, young adult has a lot of things going for and against them. They usually feel very uncertain, anxious, and fearful of what life has to offer. This is because, despite the years of schooling, no amount of classes in a four-corner room will give us the skills and practice to deal with the real world. Experience is the best teacher, as they call it.
In order to abate such a problem, this article will present a toe-dip into one of the biggest things an adult must learn to manage. Finances, financial planning, and financial literacy are among the things that aren’t usually taught inside the school. Because of that, many of us could be easily blindsided by the money that we’d make as adults and know nothing about the saving and investing department. In the long run, it is better to set yourself up for success when it comes to money, and financial planning will help with that. This doesn’t mean that this article will give the secret to becoming a multimillionaire, but it will surely help you control your finances.
There are a lot of tips that are to be taken, such as availing discounts, using a checking account bonus, and business strategies whenever you’re venturing into such an area.
What are some key concepts of finances and financial planning?
Because finances are such a broad topic, we’ll first start by talking about the important concepts that you should know and further study. This is in order for you to have a solid foundation when it comes to the terms and practices so that you’d be guided well.
- Income. As an adult, you’d probably start working. This means that you’d have a steady stream of money that comes your way as payment for the job that you’d be doing. Whether it’s a nine-to-five job or a freelance type of environment, securing a job means securing income. It’s very important to understand that what you earn is not what you should spend, nor is it what you should save. This means that you shouldn’t spend all your income on things, but you also shouldn’t save it all.
Finding the balance between the two comes with understanding your income pre-taxes, after taxes, inflation, the purchasing power of your currency, expenses, budget, and so many more. Understanding and studying the aforementioned terms will help you finance your salary better.
- Taxes. There are only two things that are certain in life: death and taxes. As was previously mentioned, taxes are one of those terms that may sound simple but could get very complicated when you dive deeper. Learning about taxes will help you prepare for the real world. What is written as your salary will never be what you actually receive. What you could spend will never be one-is-to-one with what is listed as the price of things.
Income taxes, property taxes, tax deductions, tax exemptions, and so many other terms within the world of taxes should be comprehensively learned by you. Take time to study all of these concepts, as it will surely benefit you as you go.
- Scams. Evil exists in the real world, and it’s better to be prepared against it than to believe in the goodness of others. This doesn’t mean that you have to become distrustful and cynical, however, but rather you should be aware of the different types of scams that exist. Swindling, financial scams, pyramid schemes, and other types of fraud are all schemes that you could fall into now that you’re an adult that is starting to earn money. It is important to protect yourself from these and have your hard-earned cash be yours only.